My thinking is the rot started with the government focus on universities generating research and linking that specifically to funding. Now that started sometime in the mid 90s and changed the humanities and social sciences significantly.
It meant that academics who deeply understood their subjects and taught them well, and tended to write the textbooks for undergrads, but who didn't research and didn't hold PhDs, were managed out in favour of those who did research, who, as a rule, didn't really want to teach undergrads.
So, from this, you have two problems. As the generation of research meant funding and department status, and there was such a focus on "world leading research", it led to this academic culture of obsessively pursuing research "niches" that became more and more specialist, and no one wanted to question it too much if it gave the department REF points (I can't remember what it was before the REF).
Alongside this, you end up with departments where no one really wants to teach undergrads in the basics, so it creates an unstable foundation for the next generation of academics.
I've read a couple of arguments around this aspect recently, particularly over "decolonising the curriculum" where the argument was that it's very difficult for someone to explore the phenomenon of, and debate around, decolonising the curriculum if they have never been exposed to the original "colonial" curriculum in the first place, and that's the possible danger facing today's undergrads.
I have some sympathy with this argument as it's very difficult to map cultural artifacts or phenomena within a conceptual landscape if you a) don't have any points of reference, or b) never formed the terrain of a landscape in the first place.
And I think this is what has kinda happened with queer theory and post modernism. Post modernism makes total sense to me because I comprehend it as a concept on a spatial and temporal map where it was, to some extent, an understandable development from what had gone before, and from that, I can see why and how we are now culturally "glitching" in the West many ways.
My quiet view would be that postmodernism was expressive of a kind of collective nervous breakdown after the upheavals of the 20th century, which resulted in perceiving the self and reality as being entirely exploded and its representation shattered or even erased, and queer theory is a child of that which has accepted this reading and believes that, as the self and reality is experienced as shattered or erased, any solidity, parameters, and boundaries are therefore illusory. There simply can be no metanarratives at all, even those that define the differences between youth and age, illness and health, and male and female.