Windsurfing was so huge back in the day because it was something new and the list of competing past times was vastly smaller. That is simply not the case today, i'd say most people here started because they were introduced to it by their parents or a friend. The number of people who would have started just because they saw one 'out in the wild', I imagine, would be tiny.
I'd argue it has never been easier to learn with the modern gear available but it's still a frightfully difficult sport to master, in today's world it's a rare thing to find someone with the patience to persist at it. Riding a SUP, a bike or paddling a canoe are just entirely different past times from a 'skill barrier to entry' point of view.
I discovered it at my local sailing club when myself and a bunch of the juniors found a wally in the boat shed. We dusted it off and had a crack at it. How many kids do you see at a local sailing club these days? Compared to when I was a junior in the 90's it's tiny.
I'd agree that the sport is way more fragmented because of the variety of equipment that's available compared to early on but that's not necessarily a bad thing. Personally i'm more interested in the high performance end of the sport so things like a Wally or Windsurfer LT I just have absolutely zero interest in. That's not to say that others might not find them the ultimate way to enjoy our sport. Foiling won't be the savior either because it's an absolute arms race at the moment if you're racing and if you're just doing it for fun, to get the most out of it, personally I think you have to already be at a pretty high skill level. If we didn't have the variety of equipment available to cover all interests I think the sport would be way smaller.
Development is also a natural path for a sport where it's a possibility, does anyone think that if development just stopped at the wally the sport would be thriving? Look at Bicycles these days, riding a current mountain bike or road bike compared to even a 10 years old one is night and day; the new stuff is just way better, way faster, way easier to use and way more expensive....it's booming. That's not to say, like our Windsurfer LT friends, people still don't muck around in Penny Farthings. I jest