It's not even as popular now as it was 10 years ago, thats when retro gaming was really at the top of its game, with collectors popping up everywhere, insane prices for even PS1 games and everyone and their mother was looking for a top loader NES. That was when this website really blew up in popularity too (it is a shell of its former self). With that boom a lot more collectors and old testers came out of the woodwork and a lot of really rare stuff was pretty easy to find and cheap, until the stock ran out of course (Playstation dev units were rather easy to find for ~50$ if you were on the right forums; even U64 & Dolphin dev units were popping up). While I personally would never consider PS1 and anything that came out after it as 'retro' that is obviously more a factor of my age than anything. To me, the Sony Playstation will always be the turning point towards "modern gaming". To me retro will always be before the modern age of 3d gaming, when sprites were the standard, not polygons.
But I suspect that OP is right, that 'retro' will be a sliding scale, no matter how inaccurate the scale is, being tipped by newcomers who refer to the games they played when they were 8 as retro. Which reminds me of a comic i once saw on dorkly:
While "retro" gaming is currently popular, its not actually the old games themselves (at least not as much as it was 10 years ago), but games that are reminisce of old games that are gaining more momentum (mobile games like Knights of Pen & Paper, 10000000, Organ Trail, Star Command; PC games like Hotline Miami, Monkey Island Special Edition, To the Moon...) even GoG has really took off. On the other hand, almost all old games have dropped in price significantly, some by 50%! mostly due to ports and remakes to all modern consoles as well as mobile.
As for *WHY*, I'd reckon it is for two major reasons:
1)80s to early 90s gamers grew up into functioning adults with well paying jobs and reminisce about the simpler times (or whatever emotion it elicits). Some are playing catch up, collecting and playing what they didn't have an opportunity to as a child and
2)Since gaming is mainstream now (thanks largely to the people in the above group) more and more kids are getting into it and are looking to explore "what came before". It helps things that most genres and franchises got their rise in the 80s and early 90s and since they are still around, you get instant brand recognition going backwards. (not to mention that most of the game industry folk, also mostly belong to group 1, further advertising retro games, even if it is implicit).
Anyone who says modern games suck is just a hater and/or fanboy and/or attention craving hipster (being from Brooklyn, where the modern hipster was more or less born, we have a different definition of the term: someone who is counter popular culture, in everything from film to clothing). There are more games coming out now than ever before, across far more genres and topics. You have self taught basement coders and multi billion dollar companies churning out great games (and literally everything in between). Old games have been preserved (and remade), and developers are pushing further and further.
There is a lot of people talking about old games being better, but take all that with a grain of salt. Nostalgia has a way of clouding one's vision. There were great games then and great games now. More so now, so much so that it is impossible to keep track of everything that is coming out (consoles are easy to keep track, but if you limit yourself to only playing console games you're playing Solitaire with a deck of 28).
Every generation will have people coming out of it saying games 'back then' were better, and yet the industry is growing, gaming is a major part of our culture, more games are coming out than ever. Better than ever. Games like GTA V, Skyrim... hell, even WoW are things that the devs 20+ years ago could barely dream of... and thats why each of those has a retro seed which bloomed into the awesomeness we have today.