Spiral Knights has become too complex for players.
I think the main culprit of the falling of Spiral Knights is accessories, the Forge, and Lockdown. 90% of players wish to obtain the highest Prestige, the most power in Lockdown, and the rarest, most expensive accessories. In order to attain such a feat, players require to log-in daily, grinding for crowns relentlessly, and, inevitably give up after a week or two of grinding.
The new Forge system is a deeply cracked system which drudges players to grind levels far more. People suggesting that Spiral Knights is longer-lasting with the new forge system are correct... However not only is levelling up more limited now, but levelling up is also unattractive to players.
In Lockdown, the ridiculous amount of money spent for Unique Variants is outrageous. The Black Kat Cowl should not be a helmet on its own, but a reskin, especially considering the fact that it's limited to yearly events.
The wall differentiating between players that are at a higher power and players that are on the average level is steep or very steep. Players must go through intensive merchanting or purchasing Energy with real-world money to obtain the money they have. The rest of the players are looking at all the new accessories and going, "I will never get any of those Auras, or those Wings, or those Haloes, or those cool Accessories...", because they never WILL. Of course, they could obtain some of the cheaper Auras, but if they want some of the greater Auras, the players will have to start climbing the very steep difference wall...
Spiral Knights was adored as a simple MMO. When Unique Variants, Accessories, Missions, unbalanced equipment (Black Kat Cowl, Acheron, Chaos Attire) and titles such as Prestige took the stage, players were overwhelmed by what they must accomplish to achieve higher authority with the community.
Spiral Knights has had a declining playerbase forever, however new players are constantly joining as well. Various sites, various languages, etc.
Accessories and costumes are cosmetic, and most players won't quit over cosmetics unless that's the reason they're playing. You wouldn't stop playing TF2 because you can't get a hat drop, you'd stop because it isn't fun to you. Similarly, if you hit a grindwall, you can either stop or grind. Such is life in MMO.