We have 30 teams now versus 20 in the mid-60s, but the US population is double what it was then, there's a more active pipeline from Latin America than there was, and the best players from Japan are coming over to play here. So I would say the opportunities for a larger pool of potential players are fewer than they were, which should accrue to better depth, which I believe we do see.
As for the idea that the pool of potential players is way down from what it was in the 60s because kids aren't playing as much baseball, that's an open question, but any paucity might effectively be back-filled by Latin America, where soccer-style academies are training kids to be much more technically skilled ballplayers to a degree not only not available to Latin American kids 60 years ago, but also to American kids even today.
So, I am dubious about the idea that players are on balance worse today than 60 years ago due to dilution through more opportunities to play big league ball. I'd bet an team of the very best bench and back of the rotation/bullpen players from 2025 could be very competitive over 1,000 games versus actual All-Star teams from 1965. No way to know that for sure, of course.