I agree that it is better overall. I think "gentle parenting", despite the mockery, is to thank for this. Not the extremely silly version which is stereotyped and stretched out by algorithms to be ever more extreme, but the more general shift away from the way parenting in previous generations essentially had a foundation of force and power dynamics holding it up, where the idea was that children start out as feral beasts and the parent's job is to control them and rid them of these more feral habits, in the hope they will become fairly rounded adults, to the more modern understanding that parents teach and guide their children, and that the process of growing up is one of acquiring and refining skills.
I think with the older mindset the whole process of discipline and learning how to behave was much more combative and rooted in who has the power/who is in charge, and that then plays out in the way that children interact with each other. Also when their mistakes are treated as signs of their uncivilised nature, it models a kind of harshness where mistakes aren't tolerated because they are a sign that there is something bad about you. That models using the same judgemental attitude against others.
OTOH the modelling of a more modern parenting approach is much more empathetic and understanding, and that filters through to children. I've seen it myself with my own children or by observing what happens. There are people who work professionally with children/teachers who promote the newer approaches to behaviour management e.g. in schools and they have plenty of observational evidence to report that when a school or a teacher shifts to using the newer methods you see interactions within the classroom shift. Children are less likely to retaliate when they feel hard done by other pupils, but instead to take a more empathetic/understanding approach (often mimicking the exact language used in the intervention by the adults).
I don't think that the existence of online bullying means this isn't true, because in any shift none of it is perfect or 100% at once. There are always going to be individual parents who don't make the shift, individual children for whom it doesn't make a difference, and countless parents/children in the middle because realistically most parents use aspects of both parenting approaches, sometimes encouraging/guiding/teaching, sometimes pulling rank or entering a power struggle, and in fact it's probably always been that way (with a mix) but I do think there has been a general societal shift away from power and control models of parenting towards more of a mentor/helping role. I think it's the majority tipping towards what we see as a more modern/enlightened way which has led to the shift in face-to-face interactions. The fact that online bullying still exists doesn't mean that there hasn't been a shift at all because it could be that a smaller minority of children are engaging in this and doing so more out of sight or in an anonymous way, because it is less acceptable to do so openly.
I agree with posters saying that if 70s/80s children had had access to the internet and social media, they would have been used for online bullying just as some children use them today. And with the "it would have been worse" comments I guess people mean it would be the same as it is today but more children might have engaged in it, or victims might have felt unable to speak to adults about it for fear of getting into trouble. I know those things happen now, but I do think modern parenting tends more towards a relationship where children feel more able to be open with their parents vs a more punitive/judgemental style where children perhaps were more likely to hide things for fear of getting into trouble.
I do think the internet can have positives even in the context of online bullying - I feel like in the past if you were any kind of minority, whether that is a racial minority, sexuality, dyslexic, diabetic, etc and you were the only person you knew in your school with that minority characteristic, it could feel really lonely and online communities can be really supportive for this kind of thing. Even MN was like this for me, when I was a new mum I barely knew anybody with children.