We find it increasingly hard to empathise with the plight of larger numbers of people. So, a story about a family who needs help is much easier for us to relate to than, say, a story about 1000s of people displaced or dying. As the number increases the situation gets more abstract and we just can’t connect with it.
See the work of Paul Slovic, or this super article by Brian Resnick: A psychologist explains the limits of human compassion
Other uses of psychic numbing are for the general withdrawal of people and societies from potentially major catastrophes that seem unlikely to happen. Individually, it may also be reduced engagement with a past traumatic experience.