I've two sites. The first one had been stable for 10 months. It's a govt job site. But suddenly one day( in Feb/2014) the traffic fell by 90%. At the same time I observe it's Index Status graph tumble down.
Maybe I am confused, but I thought Google Index charts in GWT shows the number of pages on the site that Google has indexed. So a fall in that Index shows that fewer pages are being indexed.
That is not always a bad thing. If you had noticed any problems of Google indexing search results pages or directories that you did not want to have indexed and took action to prevent indexing (like meta tags for noindex or Disallow in robots.txt or via URL parameters) then a falling index shows you some success. That depends on whether all your pages were indexed and you had hoped they would remain indexed and no pages were indexed that should not be.
When you say "I've not created any thin content though but tags may create it." are you referring to WordPress Tags? Those are usually best noindexed or Disallowed in robots.txt because they can serve duplicate and sometimes loosely related content. Great for humans using Search on your site, but not usually great pages to index.