Timeline of development can be seen at
http://www.lfs.net/ and in testpatch forum
https://www.lfsforum.net/forumdisplay.php?f=66
On online racing:
I never was too much into public racing.
There are enough leagues with (multiple) full grids and as far I can tell, that did not change.
I think the biggest "downfall" that maybe has occured is how people act:
Nowadays when a beginner asks something there are often postings like "do not bother, it is dead" instead of just answering the question.
Then some vets seem to think LFS word rotates around their veteran events: "Only GTWS, LFSCart and iTCC needed to keep lfs alive", there are many posts like that. Ignoring that they are other leagues, too.
And when after many years some vet gets bored of LFS, it of course means that no newb can ever have fun in LFS! Better tell everyone on the forums! There are many examples of that. Perhaps the real downfall is in old part of community who assumes that they are the only people who matter in LFS world? Because
they are bored everyone else should be, too?
And once all the vets have become bored, LFS is dead?
But luckily there is still new people coming: Perhaps if you want more drivers in GTWS or 24h races or whatever, you should not try to turn away them at every oppurnity.
This thread is example of that too. Appearently there is more interesst to discuss how everything is sooo bad, instead of just asking "Where can I race?"