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Specifically, I think that LW declined from its peak by losing its top bloggers to new projects. Eliezer went to do AI research full-time at MIRI, Anna started running CFAR, various others started to work on those two organizations or others (I went to work at MetaMed). There was a sudden exodus of talent, which reduced posting frequency, and took the wind out of the sails.
One trend I dislike is that highly competent people invariably stop hanging out with the less-high-status, less-accomplished, often younger, members of their group. VIPs have a strong temptation to retreat to a "VIP island" -- which leaves everyone else short of role models and stars, and ultimately kills communities. (I'm genuinely not accusing anybody of nefarious behavior, I'm just noting a normal human pattern.) Like -- obviously it's not fair to reward competence with extra burdens, I'm not that much of a collectivist. But I think that potentially human group dynamics won't work without something like "community-spiritedness" -- there are benefits to having a community of hundreds or thousands, for instance, that you cannot accrue if you only give your time and attention to your ten best friends.
To expand on what sarahconstantin said, there's a lot more this community could be doing to neutralize status differences. I personally find it extremely intimidating and alienating that some community members are elevated to near godlike status (to the point where, at times, I simply cannot read i.e. SSC or anything by Eliezer — I'm very, very celebrity-averse).
I've often fantasized about a LW-like community blog that was entirely anonymous (or nearly so), so that ideas could be considered without being influenced by people's perceptions of their originators (if we could solve the moderation/trolling problem, that is, to prevent it from becoming just another 4chan). A step in the right direction that might be a bit easier to implement would be to revamp the karma system so that the number of points conferred by each up or down vote was inversely proportional to the number of points that the author of the post/comment in question had already accrued.
The thing is, in the absence of something like what I just described, I'm skeptical that it would be possible to prevent the conversation from quickly becoming centered around a few VIPs, with everyone else limited to commenting on those individuals' posts or interacting with their own small circles of friends.