I have always pondered that ranking does not equal to traffic. I think that the site can be shown as number 1 to a few visitors, but you would rather have higher visibility and be shown as a average of rank 3~5 to a tons of visitors.
What does webmaster tool tell you in terms of search query impressions? has it remained the same or fallen off the cliff?
I have noted for my own cases...my ranking can drop while the query impressions jump which results in higher traffic with lower serp ranks. Which is reverse of what may have happened here.
That's the best "why" that I can think of.