The conclusion I came to is that this is due to the availability of game engines and game distribution, which have made modding pointless. Why expend countless hours building a game mode for someone else's game, in a world where that has copyright implications, when you can just build your own game?

The indie scene blew up, modding is less popular.

Modding is a lot more approachable than making a whole new game. The only issue is most games aren't moddable. Some people still try to mod games that don't support modding and that's where you're likely to run into copyright issues.

I think its both. Modding has become harder, and making games easier. At some point they are close enough to parity that it just makes sense to put in the extra effort to avoid all the tertiary issues, like copyright/trademark violations.

Even if you get by the legal implications, you still have to deal with building a sandcastle on a surface that wasn't designed for it. Yes, that has always been the case to varying degrees, but I think it can make a big difference, too. Factorio has a good modding scene, and it's in part because it was wholly and intentionally embraced by the developers in their engine design.

In the FPS space, there used to be only three games worth modding for: Quake, Unreal Tournament, Half Life. You could make a mod back then and get tons of press and players if you could follow through. I was interviewed in popular gaming websites! The games themselves were quite simple graphically so anyone with a drip of talent, time, and motivation could contribute. That specific environment doesn't exist anymore. There are so many games now, it's an ocean, developers have exerted more control over their games, and the talent required to create content for FPS games is too high a bar now.

A very real impact was that modders got hired for their work. So there are less around from that generation that made literally free games for fun.

Modding is hugely poplar in RPGs like Skyrim and Baldurs Gate.

Cyberpunk 2077 does seem to have a large audience making mods: https://www.nexusmods.com/games/cyberpunk2077/mods

edit: actually, I got it backwards, just browse nexus mods :)

Squad, Arma (and especially Arma reforger), Dayz, Battlebit, Heretic + Hexen and thr list goes on.

Arma usually gets the more complex and janky stuff (in a fun way). While the others are more modified experiences.

Like Squad, we're they've re-created star wars battlefront

The gaming isn't quite like CS, more 'tactical' oriented, but the modding scene is good - Ground Branch

Arma games, currently arma reforger which they released as a test before arma 4. Also dayz.

Dayz has a lot of mods and modded maps on PC.