Those landed gentry were certainly wealthy, however the remnants of the lower levels of the manorial system melted away.This in turn was the last vestiges to the feudal system. In both these set ups, wealth was derived solely from the activities of an agrarian society, built upon a system of taxes and dues such as soke taxes and incomes from other rights that had been granted such as the rights to pannage and many other such archaic practices.
The waves of plagues throughout the 12th and 13th centuries put the price of labour up, as it had become much scarcer and manorial incomes fell quite dramatically, plus the labourers were not as tied down as they previously had been, it meant that local Lords had to find ways to retain or even in some cases, to attract occupants of their land holdings, this again brought down maniorial incomes.
A dual trend emerged where ‘enterprise’ settlements were set up, and many large towns have their roots in these early entrepreneurial activities.These were generally a liberalised form of the manoorial system, the inhabitants were exempted from the service of the Lord and instead paid rents for the right to conduct their business in land specifically set aside - these were subject to a differant court system and were run by a town council system on behalf of the Lords.
The other trend that also emerged was that many many villages were cleared of their populations and the land given over to sheep, as the income was greater than from crops based agriculture - both of these ran right through to the 16th Centuries, the sheep clearnaces were commeneted upon by the church, not because of the sheer injustice of turning people out of their homes to die on the road as vagabonds, bu because this loss of population also led to loss of congregations and of income and prestige.It also forced people from the land and into towns, which you could argue came back to haunt the country estate land holders in the form of industry and increased labour costs as a result of that industry.
The income that could be derived from the enterprise settlements was greater than agriculture, and this in turn generated a life of its own, attracting and creating new trades and services. Once you have a critical mass of activity, industrial activities follw, to supply these nascent towns and also eventually, the towns themselves became first sellers, then finishers and finally manufactuers of products using raw materials that had been imported from the surrounding lands.
Many of these towns were incorporated during the 16th and 17th centuries, which freed them from the last traces of the manorial systems.Some towns bought out these rights, bit by bit from various parties, such as the rights to appoint the town vicar, or the right to hold their own council formulated in the manner that they chose, instead of it being made up from representatives appointed from , say, the church or local landholder.
Power slowly transferred through parliamentary representation, but the 1832 reform act is critical in this process and it began the process of removing and reducing the undue influence of the gentry - this would still take another century to be complete.
As for why gentry declined, well thats just the land holders the ones who owned the great country estates, their siblings went off and pretty much built the British Empire, and others did become inviolved in industry and made fortunes for themselves.
The income that these activities generated was far greater than the largely agricultural life. Power goes where the money is, and wealth is relative, those with the greatest incomes ended up with the greatest influence, they could pay to get their choice of candidate into parliament, and they could pay to have those representative advocate their own causes, and yes, the British parliament was that corrupt.
You have to be careful not to exaggerate the decline of the gentry, it depends upon the level of which you speak, it was a relative decline but really they were quite influential right up to WW1, and its really only after WW2 that you could truly say that they were gone in terms of power.