This community dies more than the sim itself, imho. Quality-wise, they are both degrading as time passes though, where obviously the devs cannot keep up with the evolving competition (mostly iRacing for now, but also some great rfactor/gtr2 mods too and hopefully nkpro). As a result LFS seems to keep failing in attracting or keeping old-timers.
The point is, each one of us (or each "generation" of us, if you prefer) have different points of reference and/or eras to compare with the current one.
Oldtimers keep leaving from LFS but newcomers keep coming in, so objectively the sim is not dying. Quality and seriousness levels is another story, though.
I believe that simracing in general is not that high at the moment. Apart from the fact that it is not as exotic as it was, say 3 years ago, it seems to me that the only company that really brought something fresh in the sim-racing scene and keeps improving it constantly & frequently during the past months is iRacing.
That being said, I really-really hate their pricing policy. Honestly, I find it insulting (I'm purely speaking for myself here, so plz don't take it as a side attack to all iRacing subscribers and start the usual rant). Never tried iRacing, never will as long as they keep charging their sim more than all the others together (time span included in the math).
rFactor2 is the next big thing most simmers are awaiting for right now, I guess, but I hold my breath until I see it happening (I think it will get released along with the Scirocco and/or lfs s3 :razz
Personally, I've stopped racing frequently about a year ago and I've redirected my energy mostly to organizing stuff. Every once in a while, I jump into the driver's seat for some hotlapping and/or online races in several sims, mostly in LFS though since I'm leading its Greek community.
This doesn't mean LFS is dying of course, it mostly means that I'm getting more and more of an old fart as time passes
On a serious note, I'm not optimistic for the future of LFS (according to an old-timer's standards). I hope I'll be proven wrong, but I really don't see how it would be possible now to bring back the old sparkle (inside the devs' spirits mainly, which will most certainly motivate the community again). I honestly hope, wish and want to see it happening again. I for one will be always around (not so active though).