There is an event going on (two, in fact) that encourage a lot of grinding, none of which is in that public dungeon.

Most players in Solstice are currently grinding the Siege Camps, since there is a chance to drop the new Stirk Fellowship motif (and a very miniscule chance to drop the Coldharbour Surreal Estate house). That also nominally gives progress toward the Writhing Wall event. Other tasks involving the Wall are to kill specific enemies in basegame zones or to kill Daedra (which many people do in tandem with the Siege Camps).

Also the Witches Fest is going on, so that also will get people to grind things like the Alik'r dolmens for XP, or to stick to doing simple bosses like those in basegame zones since that's way faster than doing DLC zone bosses.

And with all of that grinding, which is set to last through the end of November timeframe (at which point we'll be doing events in Vvardenfell/Clockwork/Summerset and then New Life until January), people will likely burn out long before all of that is done and the population will likely stay on the lower side. Add to that the fact that this year has... not exactly been well received, and you have a multi-faceted answer to where people went.

Just to add, another factor is that fewer people may have bought the content pass this year, as it was perceived by some to be a poor value compared to the previous chapter model.

(And those who did buy the pass would have likely completed the first half of Solstice already and have little reason to hang around - previous chapter events incentivized returning to the zone and completing dailies and other content there, but the wall event only incentivizes doing the siege camps and not the rest of the zone content).