According to Vicsig, the section from Croydon to Lilydale was electrified in November 1925. The main reason for the closure beyond Lilydale was the enormous cost of maintaining the line across the Yarra Valley flood plain (multiple ancient wooden trestle bridges), combined with the terrible speed-restricted track and the small number of passengers using the often-delayed service. It was just not worth spending the money when there were other priorities, and the replacement bus service was not only cheaper but also much more convenient to use, because it could have multiple bus stops in the towns (two in Yarra Glen, for example), whereas the railway stations were generally located away from the town centres. For Healesville residents it was better than that, because some buses ran direct Healesville to Lilydale on a different route, bypassing Yarra Glen altogether and providing a much faster service.
The overhead wires never went beyond Lilydale. The section to Coldstream remained open for a time after the passenger service ended in 1980, because of an ongoing freight service, but closed permanently soon after.
A major obstacle to any re-opening beyond Coldstream would be once again the Yarra Valley flood plain. Most of the ancient wooden trestles were destroyed in the 2009 fires, and would have to be replaced with something much more substantial, or alternatively a new route would have to be found. Again, the relatively small number of potential passengers (it's not a population growth area) cannot justify. The bus service is more than adequate (although the frequency could be better ....)