So answering the question more specifically. Games that have a single-player alternative cannot be dead by definition. You can play it until you die or the game doesn't work anymore.
Besides that, the Valheim community is still very active. The official Discord has a lot of traffic and the Body Recovery Team is still very much active.
None of that is important though because the average player numbers are around 17K players. That's massive for an indie game.
I think the actual problem is that the updates are very, very, very slow. Listen, I know development takes a lot of time. It is a long and sometimes boring concept that has to go through several iterations before being presented to the public. Otherwise, you will be eaten up alive by all the people rightfully complaining about game-breaking bugs.
One of their first big updates changed how the terrain terraform worked and was one of the reasons I stopped playing. It broke my project and basically killed all my interest. I am pretty sure this wasn't unique to me. A lot of people just stopped playing after that update.
It wouldn't be as bad if the game had more PvE content. Once you build everything and beat everything you are pretty much done and what remains is building but the terraform update killed that off for a lot of people so basically you just have the PvE.
With time I am sure updates will come and people might or might not return but one thing is for sure.
This game is already a success and nobody can tell the devs otherwise. If they destroy the game with future updates or not this game is one of the luckiest strokes of genius in recent years sprinkled with a fton of luck.
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