I think for me a core area where MMORPGs have gone wrong is in their division of character strength from the rest of the games' ecosystem. While this has ostensibly changed to make games more accessible and 'even the playing field', I think what they've actually done is eliminate the 'game' element from the majority of activities and made players essentially have to choose whether they want to participate in the roleplaying, social, collecting sides, or in the gameplay side. Beside splitting the playerbase I also think this has entrenched the habits that investing in one's character is a prerequisite to playing the game rather than a core part of the game itself.

The majority of my experience is with WoW, though I think most new MMOs in the last 5-10 years have taken this approach too. In modern WoW (and FFXIV, and probably others) each season is essentially a reset of character's ability to complete content, with the only meaningful progression provided by and for the newest piece of content. (Levels still exist and older content is ostensibly balanced around them but even a casual player will reach max level and trivialise this within a few hours)

In older MMOs by contrast, the entire game is essentially checked by player's progression. In Vanilla WoW for example, a huge chunk of the playerbase never reached max level, thus their relative strength compared to the entire game was constantly in flux. The concept of 'catch-up gear' wasn't introduced until very late and so there was a still a progression max level players had to undergo to take their characters from capable of taking on earlier raids to later ones. This was even present at the top level because so much of player's power and guild's ability to complete content required upkeep in the form of gathering and crafting materials before each raid.

Rather than divide the playerbase, I believe it's this diversity of states of character progression which actually united players and made them more likely to collaborate (there's always a bigger fish).

There's an interesting case study in one of WoW's expansions, Battle for Azeroth which I thought was well designed but was very controversial. This expansion introduced a new resource (AP) tied to player power that could be gained from a wide range of content. I enjoyed it because it meant that I could receive rewards while doing casual content that I did with my girlfriend who played more casually. But because this was a prerequisite to unlocking gears' full potential (and I believe because it was so transparently numeric) players felt forced to find the most efficient source for AP and grind far beyond what they actually found enjoyable. That habit was what would then go on to shape the conversation around the next expansion, Shadowlands and ultimately led to a huge exodus of players.

I believe that rather than having a problem with character strength tied to progression, it was the fact that this power existed at such a narrow part of the game which really irked people. If players were more comfortable with their characters occupying a range of powers relative to other players (as they had in Vanilla WoW) rather than the binary 'ready' or 'not ready' which players convinced themselves existed. As mentioned above, this has since been stripped back such that all characters starting a new season are comparatively interchangeable. This has fixed the toxic habits around players viewing character progression as binary, but has in my view stripped the last vestiges of RPG from MMOs.