There are people who rent time at my local makerspace who sell on Etsy. Maybe the issue is that Etsy doesn't make it easy to find them?

Etsy still welcomes small craft artists and makers and provides a convenient e-commerce portal for them, but yes, it's the discovery that's been ruined.

They originally broke through and defined themselves by insisting that vendors only sell original cottage-crafted work, but gave up on that requirement years ago and the sincere low-volume, low-margin crafters can't compete with high-volume, high-margin importers in either advertising spend or in the etsy-profiting metrics that drive algorithmic discovery.

Another thing that happens is your local shop will set up one Etsy store, the el cheapo junk stores may set up a huge number of different shops selling the same set of products.

This, too. Amazonification/Enshittification