1. Initial editor instability (AI grid crashes, terrain malfunctions, other edit-breaking bugs) frustrated and scared a lot of people off.

2. The learning curve for absolutely everything is really high. Terraining, texturing, placing objects, all the visual stuff uses highly malleable brushes, not simple preset tiles. Scripting, editing simple stats, dialog, all of it's pretty tough to get used to and unintuitive, and a lot of quality of life stuff is absent, so you have to open and close things all the time. When making a standalone mod, none of the systems are included (like marking stolen items or waypoint code), so you had to make it yourself or look for it in the main game code. A lot more intimidating than a checkmark or something to mark and item as owned by X. No in-editor help and very few tooltips means you have to search through the forum on how to do basic things.

3. As Raze said, content updates are bad for mods because people don't want their mod to become useless or broken from a patch. I started working on a treasure edit mod back in December thinking the big patch would come out in January, boy was I wrong. Now I don't want to work any more on it because Larian will certainly be making at least some changes to the loot system, which means I'd basically lose all my edits to the item stats text file. Also, a bunch of programmers have probably been tied up working on the Linux so they haven't been able to work as much on improving the editor, but maybe those are different teams.

4. Lack of ability to import custom models until recent, and the scene was basically dead by that point so essentially no one has done anything with that yet.

5. Inability to activate more than one mod barring manually combining the files is a HUGE roadblock to people using mods for the main game since most people don't want to bother with that hassle just to get unlimited lockpicks and all skillbooks available at stores mods and run+speed increase working together. If this issue isn't dealt with, the modding scene will never be very good because the user experience will suck.

Like Windemere, I'm disappointed but I don't blame Larian (at least, anymore :P). They clearly have a lot on their plate with the huge D:OS patch, linux version, and two new games. Maybe once D:OS reaches a polished, stable state, and especially if they providing modding life on both the users and makers sides, the mod scene will be reinvigorated. But I honestly don't have the highest hopes. Maybe their next games will fare better since the systems will be more stable.