Let's start with two premises: First, he is clearly a good fighter. He destroyed Edson Barbosa. At this point in Edson's career, that's enough to be considered very good. Second, he is not the championship level that some of us thought he was or could be.
Some of my thoughts:
First, I personally read too much into his first round with Tony Ferguson. He destroyed him in that round while Tony was on his greatest tear. I overestimated the effect of the staph infection and thought he was one good camp from beating Tony. His grappling was so slick that I figured it would be enough to get him to or near a title. I didn't consider that Landon Vanatta also smacked around TFerg for a round.
Second, I assumed he was a good striker when that was without merit. For some reason, I figured he would take to striking quickly and it just never materialized.
Third, Lee is clearly a smart, thoughtful guy. But, like another smart, hardworking fighter--Chael Sonnen--he lacks the top level mental toughness to win a title. I'm not saying he is 'mentally weak.' Clearly, he has achieved things in his life that belie this. But, he is not Tony Ferguson or Max Holloway tough.