The ATMega128... parts are the second-to-largest 8-bit micro that Atmel sells, I think they already have a strange combination of a lot of flash & RAM (for a 8-bit CPU), but not that many, or that complex, peripherals. So they might only be used in (comparatively) low volume in fringe applications.
As an example for "embedded, non Linux" microcontrollers, the lpc1227 (32bit Cortex-M0 @ 45MHz, 128k Flash) is only half the cost (~$2 @ 10k units) at much more CPU power and more versatile peripherals. Probably a much more balanced (and maybe more popular) choice for applications of a comparable complexity...
The part the author is using here is especially odd: it's on the large side for AVR microcontrollers (128 KB flash, 16 KB SRAM), and comes in a DIP package. That's an unusual combination; most microcontrollers that size nowadays are ARM, and are often only available as surface-mount parts.
As an example for "embedded, non Linux" microcontrollers, the lpc1227 (32bit Cortex-M0 @ 45MHz, 128k Flash) is only half the cost (~$2 @ 10k units) at much more CPU power and more versatile peripherals. Probably a much more balanced (and maybe more popular) choice for applications of a comparable complexity...