They're trying to encourage more bank-related anythings to be done via internet, also many are stopping with paper statement mailings.
Usually if there's an ATM in a small town, it's near a branch affiliate building. When it's not, the bank the ATM works through is responsible for its maintenance, which costs them money.
They used to push something called ChipKnip, where your bank card had a sort of separate mini-account on it specifically for small amounts, where they wanted every shop no matter how tiny to have a ChipKnip reader. This was removed recently from the dual-card readers, but ChipKnip unfortunately remains usually the sole manner (besides coins) to pay for parking in a street meter. Bleh.
I'm also a paper money person, but I live above a shopping square so we have an ATM there. They are still relatively common in shopping areas, especially where there are markets, where vendors don't have any card-reading machines.
For small towns the banks simply want to save costs and are willing to demand people drive out to main offices the next city over to get cash.