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The Pokemon Gold Beta is proof that there was a magic in the initial Pokemon teams that was lost upon the arrival of Generation 3.
That magic was fear for their job and their life. People poured as much effort and soul into the games because Pokemon wasn't a hit in Generation 1 and didn't know if Pokemon was gonna be a 1 hit wonder while making Generation 2.
You can feel the desperation in the games. The hunger. The fear. The sense that if they didn't give it their all, they'd be fucked. Then as Generation 2 cemented the fact that Pokemon was a "franchise" and that no matter what they weren't gonna sink.
So the fear left their hearts. Designs that should not have been allowed were allowed, the idea that cutting content or features was fine, stupid ideas that added nothing to the game. The idea that only do the bare minimum and you'll be fine...that's the rot that set in and fully began to bloom in Generation 6 and has continued since.
The people at Gamefreak can't recapture this, so instead they just constantly push Generation 1 Pokemon and locations, to try and capture a pale shadow of that magic, but it never does.