They implemented some really heavy handed content filters that (un)intentionally gimped their AI even more than it already was (while also announcing that they were retroactively banning anybody who had violated the filters that didn't exist to that point, as well as stealthily removing all privacy guarantees they had previously made). The rationale was to prevent non-corporate-friendly content like underage sexual content, harmful slurs, and extreme violence.

In practice it actually made those things more common somehow, and prevented mention of ANY children, any number between 6 and 18, the words "boy" or "girl", watermelons (no really), among other things. And...it didn't just filter them out, it actually locked you out of the story if you got caught in the filter so you could no longer continue it until it was reviewed by a human, though there were some annoying workarounds to this. The quality of the AI in general went down drastically.

Keep in mind: the vast majority of the userbase, especially the subscription-paying users, used AI Dungeon for erotica. A data leak (oh yeah, that also happened, they never notified anybody that there was a vulnerability that allowed anybody to read your private stories) actually showed that something like 60% of stories were NSFW, and most were caught by the filter for some reason or another (it was a terrible filter and entire otherwise unobjectionable topics were caught by it).

I haven't checked in a while but last I heard the filters are still active, because they were imposed by OpenAI in the first place. Virtually the entire community jumped ship, and within a month volunteers had stood up a functional replacement for AI Dungeon using the open source models (that's NovelAI). That's not even 10% of the story either, AI Dungeon is a legendary clusterfuck of mismanagement, accidental success, incompetence, drama, hacks, inter-community conflict, etc.