Sesame Street was originally designed for a preschool and kindergarten-age audience. We’re talking 4 to 5-year-olds. Since then, the audience has gotten younger, so the producers have had to adjust the show to reflect that. This is why it seems so much less sophisticated than we remember it being. It’s also more structured; the same segments happen at roughly the same times in every show; this is because younger kids thrive on routine and don’t always understand spontaneity.
Until Elmo showed up, no single character was central to the show. It was truly an ensemble, with interaction between humans and Muppets on a bigger (and deeper) level than today. Then the producers found out that Elmo was resonating with the new younger audience (remember, Elmo is 3 1/2, roughly the same age as the average SS viewer), and now they play the hell out of him. I wish they wouldn’t; Elmo is fucking annoying. (In all fairness, this isn’t the case with every episode, but the 20-minute “Elmo’s World” segment is ENOUGH!)
To its credit, SS still occasionally tackles issues that are tough for kids to understand; in 2001, a hurricane passed through SS, completely devastating it. This was intended to help kids feel better about 9/11; that disasters are temporary, and eventually, things do go back to normal. Baby Bear’s mother had another baby, so there was a story arc about getting a sibling and being a Big Brother, something many kids can relate to.