Currently, Jun Wu was the ruler, and hundreds of heavenly officials formed the Upper Court, making the current dynasty, and the government before them belonged to a different dynasty. Just as how regimes change in the mortal realm, the heavenly realm would also go through dynasty changes. Although the time it’d take would be very, very long, but fundamentally they’re the same. New worshippers would replace the old, and new gods would replace the old ones.
Sometimes, the decline of a god wasn’t caused by any mistakes he might’ve done and was banished as a result, but because another, more powerful god had appeared, for no other reason than because people’s lives and beliefs gradually changed and no longer needed him.
For example, a heavenly official who controlled horses must dwell very well because people couldn’t leave their horses and carriages alone when they were in need of transportation. Who wouldn’t want their horses to be strong and healthy, their travels safe? Thus, his donations would never cease.
However, if one day mortals discovered something completely new that ran faster than horses, then when this new invention overtook horses, worshippers of this heavenly official who controlled horses would inevitably decrease. Such heavenly officials who flash by like shooting stars make up the majority of the heavens.
This way of decline was the cruelest, because the process could not be turned around. Unless that heavenly official jumped down from the heavens and return to being mortal to re-cultivate a new path, to become a brand new god and ascend, then he would be destined to watch his own decline until he disappeared. However, not everyone possessed the courage and fortune.
The gods of the previous dynasty were said to have faded thus, and some also said it was because they caused a great calamity, fought a chaotic battle, which was why they all fell from grace at the same time. But, it couldn’t be proven, and it wasn’t important anymore.
—Chapt. 151: Panic Left and Right; East or West Undecided, fan translation (@illuminatedferret I was too lazy to go through the volumes, but this is the the kiln arc when they're finding the murals in the divine temples)
Now we know that that generation of gods were all killed by Jun Wu, but the information we’re told is still true because we have those 33 nameless gods as examples. They could have chosen to go back down to earth and supplement their lost spiritual energy with active cultivation, but they chose not to because they thought it was beneath them and ended up fading instead.