No doubt about the modern proliferation of pay-to-play travel ball. With greater population comes greater participation.
However, there's now also year-round soccer, hockey, basketball, spring/summer football practice, and lacrosse (an organized sport that didn't even exist in my youth). And those are just a few other team sports that vie for dwindling attention-spans.
The point isn't that less kids play baseball these days, but less kids eat-sleep-and-play baseball all day all summer, like when it was truly the national pastime. Less reps, less muscle memory, less fundamentals.
For proof, take the airplane test. Next time you're airborne -- either right after takeoff or coming in for a landing -- look out the window at all the diamonds in towns and cities you pass. You can see dozens of diamonds... but never any kids -- spring, summer or fall... (except when in uniforms, supervised by adult volunteers in organized leagues).