I'd imagine it's just a language shift. A plaid was a length of fabric woven in a tartan pattern... at some point, they just became interchangeable because while at a conceptual level they refer to different things, at a more mundane and practical level, they essentially refer to the same object. One is the concrete portion object, the other is the abstract portion. Only one word was really needed, and "plaid" was easier to say! What may have started as a local dialect or even one mans' idiosyncracy spread as language is wont to do.

But then again, I'm not an etymologist

And for the second question... I think that's probably a complicated question that pulls in factors from several fields, including "simple" economics. For whatever reason, X tartan became popular. That reason could be different for each X you're studying. I think at least a couple of the more mainstream tartans (e.g. Black Watch and Gordon) are military regiment tartans. Weavers have to make a lot of those plaids... As subjects of the Crown, all British are entitled to wear Royal Stewart (I um... may be making that up). Some others may be a matter of aesthetics or fashion (like Burberry). I think the red/yellow one you mentioned in flannel shirts may be Wallace (or a fashion tartan derived therefrom)... I can't venture into that one, except that maybe people want to pay homage to William Wallace. Or more likely, it's a very simple tartan that would be less expensive to weave.

Which leads into the economic factor involved. A simple pattern would require fewer separate materials be used, as well as requiring less time to prep / set-up the equipment. Likewise, weaving a popular tartan allows you to purchase the requisite material in bulk (winning lower prices) and allows you to leave the looms set up for a given pattern instead of having to change it every bolt.

Now we have the question of availability. It's what people can buy, so they do buy it. Popular patterns would increase in popularity and therefore in availability; less popular patterns would decrease in both. Eventually you'd have a large availability of a few tartans. You make what sells, even if it's only selling because that's all you make

But then again, I'm not an economist, either