If a child is born to an American parent or parents outside of the USA, that child is automatically granted US Citizenship at birth. Technically, this kicks in during the process when the parent registers their child's birth with the American authorities. But that child is still also technically a US Citizen even if the parents do not register them with the authorities. This means that the person, even if they continue to live abroad for their entire life, is liable to have to pay US taxes - though it is unlikely that the US authorities would ever follow up on something like this, as it would take a vast amount of resources to keep close tabs on all of these cases.
So when American parents are living abroad, or one American parent is living abroad and has had a child with someone with a different nationality, how should they proceed with registering their child... or not registering their child? Well, some parents are now choosing to simply not register their child as a US citizen. The USA is one of the only nations in the world to run a tax system that is based on citizenship instead of habitual residency. Parents who have been living abroad for a long time may figure that their child will do the same, so if they are registered as a US Citizen, they will be required to report all their earnings to the IRS even if they have never even been to the USA!
Another reason people are not registering their children with the American authorities is the Foreign Account Tax Compliance Act, which requires citizens living abroad to report certain foreign bank accounts to the US authorities, or potentially face a fine for failing to do so. This has left many US expat parents feeling frustrated, as they wish to register their children as US citizens so they can take full advantage of their roots and heritage, but they also do not want their kids to face any taxes to pay to a country they have never lived in.
Parents even face a dilemma with giving their children a US passport and then letting them formally renounce their US citizenship later if they so choose. This should, in theory, be the solution, but currently it costs over two thousand dollars for citizens age 18 1/2 and over to renounce US citizenship! So the question remains - is travel flexibility and the option to live in another part of the world a bigger benefit than the negative of potential double taxation that comes with it.