Original Sin is the Catholic doctrine that all human are born sinners due to the inheritance of the sin of Adam. However, Jesus Christ atoned for the sin of mankind.
Therefore, one would assume the sin of Adam which Man inherited would be included, and thus children would not need to be baptised in order to be saved as they would be innocent.
Why do Catholics believe original sin was not washed away along with other sins?
The Church believes that Christ's atonement removes original sin precisely through baptism. More generally, in baptism the power of Christ's paschal mystery comes to bear in the recipient, who also becomes a partaker in that paschal mystery and the life of God. For example, we are told that infants are baptized not because they have committed personal sins, but because their nature is tainted by original sin:
Born with a fallen human nature and tainted by original sin, children also have need of the new birth in Baptism to be freed from the power of darkness and brought into the realm of the freedom of the children of God, to which all men are called. (Catechism of the Catholic Church, 1250)
The Catechism of the Council of Trent tells us that "Baptism is made obligatory after Christ's resurrection." It goes on:
This is inferred from the authority of the Prince of the Apostles when he says: Who hath regenerated us into a lively hope, by the resurrection of Jesus Christ from the dead; and also from what Paul says of the Church: He delivered himself up for it: that he might sanctify it, cleansing it by the laver of water in the word of life. (Catechism of the Council of Trent, Part II on baptism)
Catholic Encyclopedia also implies that the atonement is applied through baptism in a paragraph where it argues that baptism, like original sin and the atonement, ought to be applied to all people, even infants:
Theologians also call attention to the fact that as God sincerely wishes all men to be saved, He does not exclude infants, for whom baptism of either water or blood is the only means possible. The doctrines also of the universality of original sin and of the all-comprehending atonement of Christ are stated so plainly and absolutely in Scripture as to leave no solid reason for denying that infants are included as well as adults. (Catholic Encyclopedia, Baptism)
It would seem you are not in fact asking why Christ's death did not atone for original sin (Catholics believe it did), but rather why that atonement does not instantaneously apply to all men. This is a complex theological question that I am underqualified to answer, but I will attempt to do so.
First, let me ask you a related question: Why do Catholics and Protestants not believe that Christ's atonement instantaneously applies to all the personal sin of all men? Rather, they believe that men must take some action (typically confessing and believing) before that atonement is applied to them.
You can see that, though we all believe that Christ's atonement is sufficient for all people, neither Catholics nor most Protestants believe that Christ's atonement is automatically applied to all people. Instead, action must be taken. In the case of infant baptism (practiced not only by Catholics, but also by many Protestants), the action is that of the parent, taken on behalf of the child, and along with a commitment to raise their child in the faith.
Interestingly enough, many Protestants who reject infant baptism also believe that original sin is present in people until either repentance or baptism, they just also believe that parents cannot act on behalf of a child in this matter.
Hope that helps!
