I don't follow the cutting edge of AI practice super closely and I'm confused. Why are people trying to say MCP is dead? I've set up a few MCP servers (mostly language servers and servers to access my company's Confluence), and they seem genuinely very useful.

Because many people have a very narrow view of what MCP is useful for. For organizational usage there isn't really an alternative.

A lot of people want to move away from them because they bloat the context a lot more than Skills do.