In an ideal world, there would be more competition, but FCS has fallen on hard times - a whole conference (SoCon) that used to be dominant is now a shell of its former self with all the defections, the CAA's flagship programs are in a pattern of steady decline, and the rest of the subdivision is just treading water as they get closer to DII than to FBS. It's like the whole subdivision is turning into the Patriot League.
I disagree. You're having some good programs move to FBS and other good programs move from Division II. I mean, look at the program we're talking about. North Dakota State is at least as good as any program that's left was. South Dakota State is very good too.
Meanwhile if you're looking at how FCS compares to FBS I don't see any indication that the frequency of wins by I-AA/FCS over I-A/FBS teams is decreasing. We're talking about North Dakota State now and I don't know if there has EVER been a I-AA/FCS program as successful against I-A/FBS as North Dakota State has been after moving to the subdivision from D-II. They have a winning record not only against I-A/FBS but against teams from what we now call the "Big 5" conferences.
Also, though I hate to say it, the Big South is making noise. Coastal Carolina had one heck of a football team this past year. Liberty was pretty darned good as well.
It's just change. Some programs are leaving and other programs are entering. Some traditional powers are down while some traditional also rans are up. The FCS champions of recent years have been as strong, I think, as FCS champions have ever been. Yes I know it's the same team the last four years but I'm talking about even before that.
And North Dakota State was challenged a number of times this year during the playoffs. They only had one "easy" game. The others were won by 3, 7, and 2 points.