The radius of a satellite's orbit is inversely proportional to its velocity. If a satellite is slowed by drag and its velocity not corrected by thrusters, why does its orbital radius not increase?
A certain orbital velocity is essential to equally compensate for the acceleration of gravity at any given orbital radius. Absent the force necessary to acquire a higher orbit the reduced orbital velocity of the satellite can no longer compensate for the pull of gravity at that altitude. Gravity is inversely proportional to distance squared.