Why doesn't it work?

This is a restriction with Flash -- Flash does not allow the keyboard to work in full-screen.

I believe the reason Adobe does this is due to security concerns. A malicious user could create a full-screen Flash application that look and felt exactly like the Windows logon screen, for example, and ask the user for their password. This could trick someone into giving out their password to the bad guys. Adobe counters this by preventing all Flash apps from being able to access the keyboard when in full-screen mode.

you can use fullscreen in most browsers though which is effectively the same thing. F11 if i recall properly in IE, but idk for sure, as i don't personally use it *hard to change to all my games in fullscreen :)*

I think it's F11 everywhere. It's also better than Flash mode since it doesn't cut off the menu bar.