In my view it has become a cost/performance decision. There are still some cases where analog signal processing is the only way, or the cheapest way, of doing something. There will always be a place for the electronic equivalent of "last mile delivery," at least for getting stuff in and out of the analog domain.
One of my projects at my day job was an analog front end for a digital system, where part of the analog circuit was attached to a sensitive optical detector held at liquid nitrogen temperature. But the majority of signal processing was done in the digital domain.
I agree. A couple of years ago I was asked to design a circuit that could read a voltage, perform a few calculations and multiply the result by another voltage and create two phase-shifted signals from that multiplication product. It was a simple design in that it could be reduced to high-school trigonometry. However, finding an efficient implementation was not trivial.
After spending a lot of time looking at parts and considering multiple approaches, the simplest answer was to do the slower aspects in the CPU and use a 4-quadrant Multiplying Digital/Analog Converter (MDAC) to do the heavy lifting (signal multiplication).
ISTR that doing it all digitally would have required a processor with at least a 40MHz clock and probably a separate 200MHz clock to implement a 1-bit DAC. And I would still have needed extra circuitry since one of the inputs (and both outputs) could swing +/-10V.
Not to say that the all-digital approach wouldn't have worked, but the development cost would have been overwhelming for something that probably won't sell more than 200 units or so. By using an MDAC and a couple of opamps, the design was reduced to an Arduino "shield."
One of my projects at my day job was an analog front end for a digital system, where part of the analog circuit was attached to a sensitive optical detector held at liquid nitrogen temperature. But the majority of signal processing was done in the digital domain.