I've been saying it for years: Greyhawk fans are their own worst enemies.
Here's one of the primary central problems with Greyhawk. The vocal fans complain that the setting isn't supported, but when stuff gets published, they don't like it. They don't want setting development, but if something gets published which has nothing new, there's always the group that'll complain that they already have all that stuff. It's bad business for WotC and it's self-defeating for the fanbase.
Grodog said it fairly well earlier:
Tone in Greyhawk is, I think, something that does vary quite a bit from group to group based on what adventure is currently being played, and perhaps also from edition to edition. But when I hear folks comment that Greyhawk is low magic or that spell casters are rare, that does not align at all with my vision for Greyhawk. To me, Greyhawk is a setting where gods and demons walk the earth, where artifacts and relics are at play on the fields of battle, where the landscape of the plane was shattered by human-made magical catastrophes multiple times over, and where high-level casters are available to resurrect and restore fallen PCs.
My Greyhawk perhaps draws more heavily on Michael Moorcock and Philip Jose Farmer for inspiration that other folks' view of the setting, but I still also love "medieval" feel of Thieves World-meets-Lankhmar sense of the setting too. But I'll never give up that "world on the brink of catastrophe" potential that the high-magic backdrop of history in Greyhawk provides.
The fans like their individual versions of Greyhawk, but they're all different. Even in this thread, the biggest Greyhawk fans have different ideas of what makes the setting so good. How can WotC please all of them at once while appealing to new fans?
I don't blame the fans completely, there was a lot of permanent damage to the brand that was done in the late 1e and early 2e days that it may never really recover from. I don't believe there was a concerted effort to destroy Greyhawk after Gary's departure, but the setting was poorly handled. Even then, some of the setting's problems have been there from the start. This is how the whole situation looks to me from everything I've read over the last maybe 20 years:
First problem is that Gary didn't realize the demand for a commercial game setting. I don't blame him though, he was coming in from his wargaming background and there were alot of DIY approaches there. He assumed referees would just construct their own settings. But even early on, D&D attracted a lot of sci-fi/fantasy fans, much more than Gary had anticipated, and they did things he didn't expect.
After JG proved that a commercial setting was indeed viable, Gary put out the original Greyhawk folio, and it later got updated to the box. But things were changing at TSR. Gary had his power struggles with the Blumes, while narrative RPG elements were starting to come into vogue. From what I've read, there were more than one group of creative teams at TSR at the time, one group was headed by Gary or at least shared his gaming approaches, while another started getting into the story driven elements which would soon produce Dragonlance. Gary I think may have developed more of Greyhawk, but he found himself forced out of the company, and after he left, the people who worked with him and were familiar with Greyhawk left with him. So TSR didn't have designers who had a good feel for the setting. And because a lot of the early modules were nominally set in Greyhawk, I think TSR saw it as a dumping ground for anything generic, regardless of quality, and a lot of poor quality junk got dumped there.
The nadir here was the infamous WG7. I'm inclined to agree with Shannon Applecline's background on the module on the DMs Guild. Not necessarily an attack on Gary, but definitely a combination of several bad ideas. First, Gary had published a few modules that started as demiplanes connected to Castle Greyhawk and inspired by Alice in Wonderland and King Kong. So one of the usual "geniuses" in TSR management might have thought it would be a good idea to set the whole dungeon up with silly pop culture references. Then at the time TSR was on an adventure anthology kick, so they made WG7 another anthology instead of being a cohesive whole. Then to top things off, they outsourced a good deal of it to freelancers, and I suspect at least some of them hadn't done much if any gaming with Gary, and of course didn't know how the actual dungeon was supposed to feel. That probably didn't make any difference anyway, since they were probably told to come up with some kind of silly/humorous dungeon level when they got the freelance assignment. It's not surprising the end product was a mess. Possibly there were people in TSR's management who wanted to harm Gary's reputation, but TSR at the time seemed to be focused on milking IP cash cows, and the management had a consistent pattern of stupidity.
Then we get to the Greyhawk Wars, probably an attempt to spark fresh interest in the setting. Unfortunately, the Wars themselves had a canon outcome, and was probably an attempt to bring some metaplot to the setting. And the canon result might not have worked well at all for Greyhawk campaigns that had been running for years so that only further angered the fanbase. So after all these problems, there was a portion of the fanbase that was completely alienated, but other fans were willing to accept later material like From the Ashes or WotC's attempt to revive the setting.
Then of course, some of the guys who want to reset Greyhawk to 1983 also want to reset the game to 1e which is just completely unrealistic. It might be more realistic to reset to 1983 while using 5e, but there might be some tonal problems in using a setting designed for 1e with 5e given the rule changes over the intervening years. And that has the problem of annoying players who liked the post Greyhawk Wars setting. Perhaps WotC could take an approach that shows what the world was like before the Wars occured, then present the post Wars would as one possible outcome while suggesting other possible outcomes. From what I've read, the Wars were something of a logical outcome for the world as originally presented, but the canon outcome wasn't necessarily the likely one.
So for me the bottom line is that Gary didn't develop the setting very strongly, letting DMs do what they want with it, and when he left TSR, all the creative direction left as well. And TSR damaged the setting through very poor handling. The Realms I think ended up being the default setting because Ed had put much more detail into it, and TSR had more to really build on.
As for the whole Greyhawk vs Realms arguments, I think they're silly. Both settings are pretty standard D&D, and have a lot of surface similarities. It's easy to borrow things from one setting and use them in the other. Now I can usually tell the differences between the two myself, but for a newer player, those differences aren't all that obvious. I agree with the views here that Greyhawk needs something to give it a hook to make it distinct from the Realms. I think the setting lends itself better to PCs building armies and establishing domains to rule, but that might be a gameplay style that's become passe or unpopular.