I'm not sure I follow your logic here: if the bar to entry gets so much lower then there should be more trades. And while the number of companies may be shrinking (let's leave the facts why that's is happening as it shouldn't be a surprise) what does this have to do with shrinking volume? IMO it doesn't matter how big the pie is and if it's smaller than it used to be, what matters is how many hungry people are sitting at the table. There is so much money to be invested/traded etc. But I'm open to the idea that I might be missing a bigger picture here. I would think that volumes would need to be aggregated across all asset classes and products. So as you pointed out, there might be more volume traded in other products. Add OTC markets, dark pools and it might very well be that volumes are all up (I don't know), thanks in part to the wealth transfer and CBs policies. Some of the money, especially retail will not be back for a very long time. Burned by tech bubble and later by financial crisis, a lot of people abandoned the markets altogether. Add to that the fact that you will see increase in withdrawals/redemptions from pension plans for many years to come. You can't beat demography.
Here is another piece which might explain the low volume/volatility. There is a new Dept of Labor law that covers retirements accounts. In essence, the law is to discourage "churning" retirement accounts . In compliance with this rule, firms have phased out commission based accounts and put their RIA in fixed fee AUM based compensation structure. At a granular level, it means RIA now have little incentive to seek alpha thru research then trading... just put all the accounts in some dividend stox, collect their 1-2%. It incentivises underchurning which can't be good for vol and vol.. BUT great opportunity for traders who can show a good track record since the investment world is starved for alpha.
Traders who knows better? I generally don't watch volume, but when market is going up on lower volume it is more likely to crash afterwards and it signals market weakness even if prices are higher. To answer the OP's question, whoever wanted in they are probably already long, and don't want to commit more capital to this high levels. So it just a few non-vacationers pushing price around instead of sitting on the beach.
I've heard that there are requirements now in place that make active fund managers (of pension plans etc) financially liable for both underperformance and excessive costs generated, as compared to some benchmark. As a result of that financial liability it makes then unwilling to take that risk and as a result switch to passive investing which is a growing trend for some time and by itself will cause serious repercussions down the road...