Yooka Laylee was just a mediocre game. It wasn't actively bad. But, it still shows why so many indy/smaller devs go the 2D route. Just much easier.
Easier to make, sure. But not easier to sell. 2-d platformers are a dime a dozen. The vast majority get buried and don't make good sales. Very rarely do we get something like Shovel Knight. While 3-d platformers are harder to make and require more money, they are also far more unique in the market (especially newer ones from third party companies) so, individually-speaking, have a lot more sales potential. Plus these games are expected to cost more to buy, which increases revenue potential.
Maybe. The reason I was interested in Balan Wonderworld and Yooka Laylee in the first place was specifically because there are not a ton of good 3D platformers, while there are tons of good 2D ones out there.
So, I get that there's less competition. It's just a question of whether the amount of extra effort required for a 3D platformer outweighs the value of being in a less crowded marketplace. There's also the issue that because the initial funding required is so much higher an publisher may be able to fund 5 games that might be the next shovel night for the same amount of money that they could fund a proper 3D platformer.