I have also noticed a drop in engagement these past couple of weeks. I think there are many reasons why this is happening, just a few of which include:

1. Way too many memes and meme-centric communities; I've had to block so many communities the past few weeks just to declutter the All feed and to find posts that warranted actual discussion; it starts to feel like 4chan after a while
2. Too many communities and not enough users; there was an attempt to mirror reddit during the exodus, and there just isn't enough of a userbase to justify so many communities; many of these shell communities are aggregating dozens of off-lemmy links everyday without a user base to engage with, so it just spams the All feed and makes it look like a ghost town
3. Many users have likely gone back to reddit or found alternative platforms

My own engagement has slowed, as I just don't even know if users from other instances are seeing my comments or posts. Lemmy's federation system broke shortly after the explosive growth and as far as I can tell it hasn't been fixed. Subscriber counts vary greatly, depending on which instance you view a community from. Some folks see your post, and some don't. That's a nonstarter for a lot of users who might otherwise engage.