their A-300 (non -600s) were getting a bit old and were, with a three man cockpit, not all too economical, because they were only suitable for medium haul. In the 1990s more airlines, both in the USA and Europe, withdrew their widebodies from shorthaul service to offer more frequency in smaller aircraft instead.
Air France, Alitalia also had the first generation A-300s but found them unsuitable for the changed demands and their largest 'european' aircraft is now the A-321 as well.
Iberia used them on services like MAD-LPA, LHR, ORY, FRA, FCO and such. So basically the A-321 is doing what the A-300 did earlier, added with the occasional A-340s to the Canaries.
If you compare a 1980s or early 1990s timetable you can see KLM, Swissair, BA, Iberia, AF, Olympic, AZ and in the USA United, Delta, Northwest, Continental, American, using much more widebodies on short services where nowadays it's all 737 and A-320.