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Hinduism or Sanatana Dharma is considered to be one of the oldest religions. (Christianity came after Christ's birth more than 2000 years ago, and Islam came mostly after Paigambar).
What could be the reason that such an old religion's spread was limited to India, Nepal, Indonesia, Cambodia, and a few other countries? What was the reason that Hinduism did not grow or spread exponentially? At least it could have spread to other countries. But it didn't, so why not?
Hinduism does not have a start date.
In olden days, there was no religion called 'Hinduism', it was just Veda (vaidika) or Sanatana Dharma, and it was prevalent all over the world.
But only people in Bharata desh followed it strictly. Other tribes who followed it a little bit or not at all were the Mlecchas, Yavanas (Greeks), Turushkas (Turks) etc.
In past few hundred years, Western explorers called people who live across Sindh river (now in Pakistan) as Sindhus, which over time became Hindus.
Let's look at the 2 core concepts in the 2 most prevalent religions today - Surrender in Christianity and Namaz in Islam.
Surrender is equivalent to Sharanagathi in Hinduism. Even etymologically, it sounds the same.
Namaz is equivalent to Namaste in Hinduism. Again etymologically, the word was derived from it.
If you look at ancient texts in any religion, they have words and concepts which ultimately derive from Sanskrit/Vedas.
e.g. The word 'Brahma' is related to word 'Abraham' and Judaism/Islam/Christianity are all Abrahamic religions.
When some Christians say the earth is 6000 years old, they probably unknowingly refer to the fact that the present Yuga - Kali Yuga, started around 5000 years back. Their story of Noah's ark is the same as Manu's during great flood of Matsya avatara.
There are Hindu temples in Burma & Indonesia.
Kandahar in Afghanistan was the Gandhara desh in Mahabharata where Gandhari & Sakuni came from.
Kazhakistan was probably Kaikeya desham because in Ramayana, Bharata's wife was from Russia.
California in USA was probably originally called 'Kapilaranyam' - which was Kapila muni's ashram which Sagara kumaras found when searching for the sacrificial horse. The path they dug is now covered with water, hence it's called Sagar (or sea).
There are many more examples to show Sanatana Dharma was prevalent all over the world. Over time, in Kali Yuga, religion deteriorates, so new religions have to pop up to cater to the needs and characteristics of those who are unable/unwilling to follow tenets of Vedas.
ANSWER - Hinduism/Sanatana Dharma used to be prevalent all over world once. It is not prevalent nowadays, because people's minds have deteriorated and they're unable to follow its rules, while other religions have lesser/easier rules.
Source - http://www.kamakoti.org/hindudharma/part2/chap2.htm
As per purANas, varNashrama existed in other dvipas as well at the start of satyayuga. Excerpt from vishNupurana book 2 ch.4 :
The castes are called Áryaka, Kuru, Vivása, and Bháví, corresponding severally with Brahman, Kshetriya, Vaiśya, and Śúdra...Such, Maitreya, is a brief description of Plaksha-dwípa.
The Brahmans, Kshetriyas, Vaiśyas, and Śúdras of this Dwípa, called severally Kapilas, Arunas, Pítas, and Rohitas (or tawny, purple, yellow, and red), worship the imperishable soul of all things, Vishńu, in the form of Váyu (wind), with pious rites, and enjoy frequent association with the gods... A large Śálmalí (silk-cotton) tree grows in this Dwípa, and gives it its name.
The four castes, assiduously devoted to their respective duties, are termed Dámís, Śushmis, Snehas, and Mandehas, who, in order to be relieved of the obligations imposed upon them in the discharge of their several functions, worship Janárddana, in the form of Brahmá, and thus get rid of the unpleasant duties which lead to temporal rewards... Kuśa-dwípa is so named from a clump of Kuśa grass (Poa) growing there.
The sea of Ghrita is encompassed by Krauncha-dwípa, which is twice as large as Kuśa-dwípa... Brahmans are called Pushkaras; the Kshetriyas, Pushkalas: the Vaiśyas are termed Dhanyas; and the Śúdras, Tishyas.
The caste of Mriga is that of the Brahman; the Mágadha, of the Kshetriya; the Mánasa, of the Vaiśya; and the Mandaga of the Śúdra: and by these Vishńu is devoutly worshipped as the sun, with appropriate ceremonies... Śáka-dwípa
mahAbhArata-bhiShmaparva-XI, however, mentions four varNas only in sakadvipa indicating that by the time of bharata war (dvapara-->kali) varNashrama survived only in sakadvipa other than bhAratavarsha :
As heard by all men there, in that island of Saka, are four sacred provinces. They are the Mrigas, the Masakas, the Manasas, and the Mandagas. The Mrigas for the most part are Brahmanas devoted to the occupations of their order. Amongst the Masakas are virtuous Kshatriyas granting (unto Brahmanas) every wish (entertained by them).The Manasas, O king, live by following the duties of the Vaisya order. Having every wish of theirs gratified, they are also brave and firmly devoted to virtue and profit. The Mandagas are all brave Sudras of virtuous behaviour.
