It made sense to me.
1. The WWE's decline really started in 2001, with the fall of the Attitude era, and top stars like The Rock and Stone Cold Steve Austin moving on with their lives. A lack of real top stars hurt the WWE a lot more than simply having two (or three) rosters did.
2. In addition to losing top stars, professional wrestling itself just lost a lot of fans. It stopped being "cool," and that itself has taken a lot of wind out of the industry's sails.
3. Brock Lesnar was a huge star who could have really thrived with the brand split, but when he left, John Cena was rushed, as was Randy Orton, and since then we've had, essentially, boring main eventers to deal with a lot.
4. The brands are essentially the same. There is slight difference in the writing, but they're not actual competition. It's merely a process that feeds itself. Guys are introduced and tested in ECW, they grow and develop on SmackDown! and on RAW they become boring and are expected to make money somehow. It's not like SmackDown! is harming RAW in any way.
5. It's all Triple H's fault.
