I wouldn't say it's dying. Sure, it's taking a hit from video games and such, but when the current generation comes down with carpal tunnel syndrome, we'll go back to trains.
Charles, tbh I've noticed the same thing. I was raised without videogames (unless you count Windows Pinball), and I'm always surprised how long my friends can spend staring into a three inch screen doing essentially nothing. And I'm not gonna lie, gunning down zombies is fun for a while. But will we all be gunning down zombies when we're sixty? I doubt it. Though I do think it sucks that most people my age don't know a crescent wrench from a skill saw, some do, and get very much into it. My cousin for example builds his own BMX bikes. And some people take apart computer code in the same way their parents/grandparents did bicycles.
Besides, I honestly wish I'd waited a decade or two to get into the hobby. I got into it at the age of eight, with few resources, and messed up a lot of nice stuff. Then I got in way over my head, and it's mostly sat around since (except for one burst of activity recently where I ripped it all out, built a few structures, and made a track plan.) Hobbies are great when you have the time. As a college student, and even in high school, homework and other stuff doesn't always leave time. I just like building stuff, and as a result I have way too many hobbies. Model trains, model cars, fishing, sculpture, messing around with mechanical stuff, working on my vintage station wagon... then factor in Youtube etc. It's fun and all but it's the sort of thing you only really have time for when you're young, when you're old (no offense meant obviously) or if you find a job where you get paid to do it.
The Internet's kind of a blessing and a curse. Because of it, we (well my generation anyway) have less time to do other stuff, but also because of it, we can go on forums like this one and meet other people with the same interests. If it wasn't for model train/car forums, I might have given up long ago.
Dying? No. Just, ah, reorganizing.