The significance of each of these developments in steam engines is that it represented an advance in the transfer of energy into other forms. The Hero's engine used steam to produce kinetic motion, which in turn produced mechanical energy. Watt's engine had several significant improvements, most notably that it could work nonstop because it kept the heating and condensing compartments separate. The Watt engine was instrumental in fueling the development of the Industrial Revolution in Europe and America.
Any time something is replaced, it is usually done so because the replacement represents an improvement over the existing technology of the time. While both these engines were milestones in their day, there were those who kept tinkering, kept improving, kept innovating. Eventually, improvements were made to the point that both these engines became obsolete and moved to their place in history.