I think one of the biggest issues Blockland has and partially the reason of its decline was its poor play in market competition.
Blockland's hayday I'd say was around 2007 to 2011 give or take, which Blockland had very little market competition when it came to sandbox games. Its only major competitor was Roblox, which in comparison was a behemoth which nonetheless Blockland performed quite well against. But now there are plenty more sandbox games people can choose from, many of which might be capable of doing everything that Blockland can do, but the stuff they can do are done much better than Blockland does. Because of that the game has to compete with the likes of Minecraft, Rust, ARK, etc.
Call it apples and oranges as much as you'd like- but it still doesn't change that they're all sandbox games that Blockland has ultimately lost to.
I think one place that Blockland fell in was how it was played. Blockland, in its most basic state is more like a tool than a game. I think a good way to pull in more players is to make Blockland function more like a game rather than a tool. It's not too often do you see large streamers or Youtubers building a house for 5 hours unless said process involves resource collection or fighting off players and/or monsters that want them and their house/base destroyed.
Just food for thought.