Where do you see gradual decline? There are more macOS games than ever.
This is very much true — but this is not any different from how things were a year ago or say, five years ago. Mac gaming was always a small niche and only 10-20% games on Steam have a macOS version. This didn't change in the last decade or so, although the number of high-quality games have been steadily increasing.
The difference is that now Apple is offering high-end APIs and tools that they did not offer five years ago, and that now they also ship gaming-grade hardware that's 3x faster on the low end. Whether this will have positive consequences for gaming on Mac will become clear in a couple of years. Not overnight.
Which penalties? I have tried a bunch of x86 games on my new 16", all of them run much better then on my previous Intel laptop. Sure, native ARM version would run better. But that's an academic distinction at best. The bottomline is that practically any game available on Mac the new M1 Macs can run better.
Again, it depends on what games you are interested in. Myself, I am a strategy and RPG fan and almost every title I care about is available on the Mac. The few that are not I can play using GeForce Now. I though about buying a PS5, but there are only one or two games I am interested in in the entirety of PS5 market, so it does not make much financial sense for myself.
Now, if you are into action games or whatever, sure, Mac is a stupid way to go.