(I indented this post for ease of reading, it's actually not that long.)

TL;DR: Every faction in the Omicrons has become nearly identical to the others, differing only in lore and details. There are no underdogs and there is no balance of power, making everything not realistic and uninteresting. The lore and system developments created an unsustainable situation which will eventually cause people to stop playing Omicron factions and the only ones invested in them will be their leaders.

(The mentions of 'Omicrons' in this post also refer to edge world Omegas because they are relatively similar).

Some definitions
I'm using two terms (gameplay features and lore features) in the rest of this post which may be misunderstood so I will define them here. I understand gameplay features as any external additions to an NPC or official factions which directly impact gameplay, such as better ID, shiplines, commodities, rephacks, et cetera. Lore features are things which enable factions to create more interesting and more robust backstories, which provide a motivation to play a certain faction as well as limits to how a faction is played. Mostly though, these are bases (more specifically still, planets) and infocards.

Vanilla
In the vanilla lore, the Omicrons were in a relatively balanced struggle between Corsairs and Outcasts. They were the biggest and the best because they were the only two criminal factions which had planets. They were also involved in an extremely cool dichotomy, being essentially opposite in every aspect of their lore. Corsairs had more people, but they lived shorter lives because of rampant starvation and Crete had practically no resources. Outcasts had fewer, but lived longer lives and their planet was rich.

There were the underdog criminals in the form of Red Hessians -- who much like the Corsairs and Outcasts had a class 10 fighter, but no planets. Finally there was the lawful aspect to the entire thing - the BHG which based of the two Zoner bases in the area. Nomads and AI didn't exist as they were found only in easter-egg systems. Order was not particularly relevant but they owned a planet. No class 10 fighter though.

Progression
Over the last few years, the Omicron factions have begun to homogenise and the dichotomy in the form of Corsairs and Outcasts began to be less noticeable with removal of the battleground systems such as Omicron Eta as well as certain rather ambitious people (mostly speaking here of @Wesker and @Lythrilux) began pushing for the underdogs (Hessians and Core) to become more powerful, effectively disturbing the balance of power in the Omicrons. They now possess lore and gameplay features which make their "power level" comparable to that of old Outcasts and Corsairs.

This, coupled with absolutely terrible decisions when it comes to system development in the Omicrons and Omegas (specifically idiotic moves like disconnecting Omega-5 from Cambridge, not removing Omega-9 as well as reducing Omicron Theta - a system with extremely rich vanilla history and a traditional activity hub - to being an entirely unnecessary buffer system) brought the underdog Omicron factions to rival Outcasts and Corsairs in power.

The problem

Combat problems
I'm not particularly interested in the RP ramifications, because that's not important for this post. You cannot build solid factions just on RP (as proven by any Cryer faction that I've seen), you need gameplay and lore features as well. Once you have those though, you can easily build an active and prosperous faction even if the RP is not very interesting or your members aren't that invested in it (pretty much all historically significant Outcast factions come to mind here).

What this harms is mostly gameplay and player attraction to factions. With the current low population Discovery, it baffles me that system developers choose to cut down on the number of systems and the story developers and admins give lore and gameplay features to NPC factions (such as more bases or commodities). This makes the playerbase spread more thinly across the Omicron factions and while previously when there were "Omicron battles" people either hopped on sairs or casts, now there are many more options to choose from. This makes it harder to get good, large fights going.

On top of that, trying to motivate your faction members to log has become a Herculean task with many players being members of more than one Omicron faction, so when there is a requirement to log you may find that a few of your members have already logged the opposing side.

Additionally, with the number of prominent Omicron factions present, it becomes much harder to get unmoderated, balanced and fun fights going. Most of the time, during the period when you assemble faction members before a group fight, you will find that there will be not just one opponent, but often two, or more. And if they join during a brawl, that's even worse because unmoderated three-ways always end with one side getting demolished early.

Trading problems
With the system of faction perks, currently all Omicron factions have their own trade routes. This leads to fewer choke-points, larger playerbase spread (because most of them sell in different places and there are different optimal traderoutes), and less combat-focused activity because people are focused on trading. Additionally, there are four different mining fields where just one would do.

Additionally the lore value of each of those commodities varies wildly. Most "research" commodities (Artifacts, Xeno Relics, Cryo Organisms, Azurite Gas) have zero sustainable lore value because once something has been researched, it's rarely further required, especially when it has no practical value. (Like, Iridium Ore has quite a bit of lore value as there might be many factions who need it to construct new ships for instance. On the contrary, few factions would need a reliable source of mass Xeno Relics for anything.)

Lore problems
Corsairs and Outcasts have been stagnant for a long while now without any new interesting solars. No new planets to colonise, no new bases to populate -- and even if there are some, they just appear out of nowhere without any prior warning from the devs and no RP can be done about them. Core and Hessians, on the other hand, have recently settled new planets in Nauru and Tangier -- and this can lead to actual interesting RP which will shape how these planets will look in the further versions of the mod. On top of that, colonisation of new planets is always a great reason to involve more factions into your own diplomacy.

I'm not complaining about "not having stuff to RP about", because I would be perfectly happy drawing up my beautiful Custodian Attica and there is still much to write about, but I doubt many factions are interested in a relatively small and unimportant region of one planet.

Solutions
I see two ways and three mindsets out of this problem. I don't particularly like any of them but something has to be done to preserve the Omicrons from becoming a mess.

• The subtractive way
  • The pvp/balance mindset: Bring back Hessians, Core, Zoners and Order to their original positions as underdogs. Limit Core and Order capital ships only to limited numbers for official factions, and disallow indies to fly anything above the gunboat. Remove caps from Hessians and Zoners, give capshipbuilding ability to Unioners. Make the Core become a small squadron of elite fighter pilots, more like vanilla BHG. Make Hessians more prevalent in Rheinland and Omegas by removing Omicrons from their ZoI. Make Core, Order and Hessian snub weapons each be countered by a different shield type, but make it the same type for faction.
    
  • The lore/economy mindset: Remove the Core and Hessian planets, make them crippled by pestillence or destroyed by Nomads. Remove all buypoints for Kemwer and APM Hardware but one or two in the same system, or put them in places which are only dockable by freighters. Remove all mining fields in the Omicrons aside from the Iridium Ore one.
    
  • The system mindset: Disconnect the Nomad Omicrons from the pirate Omicrons and separate the two rivalries (Corsairs vs Outcasts and Core vs Order) into entirely separate regions, making it substantially more inconvenient for each of the two conflicts to interfere with each other. Make the Sigmas and Omicron Theta a primary battlefield for Corsairs and Outcasts, and disconnect them from Delta and the Nomad Omicrons.
  
  
• The additive way
  • The pvp/balance mindset: Give Corsairs and Outcasts a new, separate snubline, create more diversity in how each of these factions can be played. Give Outcasts more tanky snubs and give Corsairs more nimble ones. Give Outcasts the goddamn armored transport.
    
  • The lore/economy mindset: For Corsairs and Outcasts, give each a new legal planet-side commodity. It can, for instance, be a food product that's not infested by Cardamine, grown on Planet Soledad for Outcasts and a valuable metal alloy engineered on Crete for Corsairs. Give each faction an unlawful ore sellpoint that's closer to the piracy spot than their home planets. Tweak the infocard of Planet Lesbos in Omicron Omega to make it possible to settle and easily terraform, then allow Outcast and Corsair factions to RP colonisation and docking-ring construction on Planet Soledad and Planet Lesbos.
    
  • The system mindset: Make Omicron Theta an activity hub again and intersection between Outcast Omicrons, Corsair Omicrons, Omegas and Sigmas. Change Omicron Delta to be an activity hub only for Core and Order, and an intersection between Taus, Sigmas and Nomad Omicrons.