Whether one believes the quality of food in the MDR has declined or not is somewhat irrelevant, I think.
There are several reasons the idea of alternate restaurants on ships has grown, and has become very widely accepted by passengers.
#1 -The ability to offer a larger variety of culinary choices, just as people are accustomed to on land.
It's important to note that on the lines offering the most alternative dining venues, not all cost extra to dine in; or in some cases the surcharge is minimal (like in the $5 range).
#2- No matter how good the quality of ingredients used for the food in the MDR, it can never served as well as it can in the smaller venues. In the smaller dining venues onboard the food is cooked as it's ordered, and that is simply not possible when serving 1000 or more people at a time in the MDR.
The "midnight buffets" produced a huge amount of waste. Budgeting for buffets and controlling loss costs is one of the most difficult tasks in the restaurant industry. The cruise lines also had a count of what percentage of passengers made use of the midnight buffets, and found those numbers dwindling, and no doubt also took into account the added stress hosting the buffet put on their manpower.
The "midnight buffet" has really not disappeared on most lines, but it has morphed into different things; like on deck bar-b-q s , more deck parties with themed buffets, and different specially themed buffets during the cruise, like chocolate and fruit buffets.