It's nothing to do with the overseas players coming in. It's to do with the domestic talent that's being developed.
Until 2019, the MLS teams didn't operate under any of the FIFA training/development compensation rules. As their local talent improved, and the quality of their academies improved, they started losing youngsters to overseas clubs and were receving nothing in the way of compensation. So in 2019, they decided that maybe this FIFA compensation idea was a good one and the clubs signed up for it. I think that's a pretty good indicator that the talent level improving.
In the last 20+ years I have lived here, the standard has definitely improved and the number of people with an interest in the game has noticably increased amongst the people I know. It's still not Tier 1 level, but it's easily as good as League 1 that Cadden will be playing in next season.
And while the US International team has an arguably easier route to qualify for the World Cup, they have performed much better there than our international team.