In the New York Times there are no references to beer pong as a common game until 1999, and Google Ngrams shows that the prevalence of the term in its digital book collection was flat and nearly invisible until the second half of the '90s, when it began exploding in popularity. The first time I remember it first-hand was freshman year of college, 1999-2000, and had never seen it at any party in high school or middle school, or when my babysitter had friends over for a drink when I was little, or in any movies or TV shows where there were young people drinking.
Such a widely practiced social event that rose so high in popularity so quickly asks for an explanation. In particular, how does what looks like a glorification of drunkenness fit into the larger context of plummeting wildness among young people during the past 20 years?
First, it is highly formally structured -- it requires a surface of a certain size, cups set up in a certain pattern, and a set of rules for who goes when, what to do when the ball goes into an empty cup, etc. Highly structured activities inhibit the mind from diffusing its attention lens, getting lost, and going with the flow, wherever that may lead. It may not be like signing in at the doctor's office, but given that it is supposed to be a party, you might as well have the kids' mommies there to enforce a minimum distance between bodies that otherwise might get too close.
Second, it has become a spectator event, where everyone else present looks on at the game, rather than only the players involved paying it any mind. They stand in a circle around the table, form a broken circle along the wall if it's a small room, sit side-by-side on a nearby couch, or something else. All of the formations show each individual in the audience more or less disconnected from one another and turned toward the game, only occasionally turning to someone nearby to comment on the game -- "Oh damn, that's three in a row, hope he can handle his liquor!" -- rather than socialize about whatever is on their mind.
That's different even from when I first saw it just over 10 years ago -- it is a horrifically boring sport to watch, so no one else gave a shit back then and kept drinking and talking to whoever they were with. There were only two players, one on each side, instead of the now usual two-on-two, because they couldn't convince anyone else there that it was worth playing (or watching). It was also called Beirut, an exotic and somewhat evocative name that made no logical sense to the Aspie youth of today, and was therefore given the more transparent name beer pong.
At any rate, the spectator nature of the game keeps most of the people at the party from being active in any way, and instead passively observing some stupid drinking game. Nor does the fact that they are all huddled around the table mean that there's a strong sense of group cohesion. Since the action is not very exciting, it's like a bunch of people spread among a number of couches all watching the same boring TV show.
Third, it prevents people from wandering off to escape public attention. Most kids aren't comfortable enough to boldly flirt and make out, let alone have sex with, someone else in the presence of the rest of the group that was intensely fixated on ping-pong balls bouncing into cups of beer. They need to go somewhere more private and intimate. So then this also relates to the spectator aspect: if the norm is that everyone has to stay around and watch, it'll be poor form to pair off with someone you like and go talk, touch, or whatever, in some room away from everyone else. You'll be ostracized for trying to have a life.
Finally, the game has become so commodified and co-opted by now that it has lost whatever iota of carnivalesque potential it may have had 10 years ago. You can now buy specially designed tables for beer pong, and there is even a World Series of Beer Pong. I know that only a minority of players use one of these special tables, or would consider entering a professional tournament. But even that is too much -- there were no special-purpose toiletpaper brands for wrapping someone's house, and no championship to see who could T.P. a tree the fastest. Same goes for spin the bottle. There were no bottles marketed just for that purpose because it never ossified into an empty ritual. Only at that point do people stop caring about the social interaction itself and turn to consuming products aimed at the in-crowd, in a vain hope to recover the earlier feeling of community that couldn't be bought or sold.
Formal, structured, commodified, ritualistic activities are all well and good in certain times and places, and among certain groups. But a party is supposed to level ranks somewhat, bring community members ("peers") close together, build trust between them by putting them in a slightly vulnerable position and coming out OK, and easing up on the authority that groups usually exercise over their members' behavior, for example by not following the couple who pairs off -- back in ye olden days, even if a girl belonged to a stable clique, they would not circle the wagons or send the domineering fat one to cockblock the boy she was flirting with.
But cockblocking as a sign of how authoritarian young people's social groups have become is a story for another time...