I think RAG is out of favor because models have a much larger context these days, so the loss of information density from vectorization isn't worth it, and doesn't fetch the information surrounding what's retrieved.

That's true if you use RAG to mean "extra context found via vector search".

I think vector search has shown to be a whole lot more expensive than regular FTS or even grep, so these days a search tool for the model which uses FTS or grep/rg or vectors or a combination of those is the way to go.