...I really do not understand why Donald Trump chickened out from a self-serving practical standpoint.
Sanders was hardly going to school him.
Because he's courting Bernie Bros that would side with Trump in the GE if Bernie doesn't get the nom. A debate that highlights the sharp contrast between the two, in which Bernie goes hard on Trump and/or Trump would go hard on Bernie, makes that less likely. By entertaining the notion of a debate, but withdrawing it on the grounds that Crooked Hillary and the corrupt DNC is stealing the nomination from him, he gets to bait those Bernie supporters into thinking he's on their side.