What lead to the downfall of Tumblr?

Constant changing of hands and lack of direction, and perhaps allowing certain types of content on it. Maybe it will be ok now in the hands of Automattic.

Interestingly, similarweb says it's still the 77th biggest site in the US

Good questions, maybe for the same reasons that Yahoo and MySpace did not keep up with the times? They stopped adapting and innovating, to serve people and market dynamics that constantly change. It's interesting to see how some companies hit the mark so well in responding to a need and therefore scale fast, but have more difficulty maintaining that innovative mindset at the growth stage. "The Innovator's Dilemna" is a great book to read on managing innovation.

Change of culture.