Log in to a competitive game after a month away and something has usually happened to your rank. Sometimes the number moved. Sometimes it is hidden behind a “play a match to restore” prompt. Sometimes nothing changed at all and the game simply forgot you existed. These are three different design answers to the same question, and the question is harder than it looks.
What decay is actually for
The stated reason is almost always accuracy: a rating is a claim about your current skill, and a claim made four months ago is stale. That is true, but it is not the real reason, because a stale rating corrects itself within a handful of matches once you return.
The real reason is scarcity at the top. Ranked ladders sell exclusivity – the badge, the leaderboard slot, the colour of your name. If a player can reach the top tier once and hold it forever by not playing, the tier stops describing anything. Decay is how a system stops the highest ranks from silting up with people who peaked and stopped.
Which is why decay is almost universally applied only to the upper tiers. Nobody decays a mid-ladder player, because there is no scarcity to protect down there.

The three mechanisms
Rating decay. Your number drops by a fixed amount per period of inactivity. Blunt, transparent, and the most punishing because the loss is real and has to be re-earned.
Visibility decay. Your rank is hidden or greyed out until you play a qualifying match, at which point it comes back unchanged. Nothing is lost; you are only required to show up. Far gentler and, for most systems, sufficient.
Seasonal reset. Everyone is knocked down and re-placed at intervals, regardless of activity. Not decay in the strict sense, but it solves the same problem by making all ranks temporary. Most large ladders now do this in some form, which is part of why explicit decay has become less common than it was a decade ago.
Systems that run regular content rotations tend to lean on seasonal resets, because the game itself has changed enough that old ratings genuinely are stale.
What decay costs
The design cost is that decay punishes the wrong thing. It is aimed at trophy-hoarders and it lands on everyone with a job, a holiday, or an injury. A player who takes three weeks off and returns to a lower rank has been penalised for having a life, and the penalty is applied at exactly the moment they were choosing whether to come back at all.
There is a second, subtler cost. Decay converts a ladder from a measurement into a maintenance obligation. Once the rank can rot, playing stops being something you do because you want to and becomes something you do to avoid losing ground. That is a reliable way to generate resentment in the players you most want to keep.

Why visibility decay usually wins
Hiding a rank until you play one match gets nearly all of the benefit with almost none of the cost. The leaderboard stays populated by active players. The returning player loses nothing. The friction is one game.
The only thing it fails to do is push high-rated players to keep playing continuously, and it is not obvious that a ladder should want that. A system that forces its best players to grind maintenance matches produces burnout at the top, which is the opposite of what a healthy competitive scene needs. The same tension shows up in tier-and-division systems generally: the more precisely a rank tracks current form, the more work it demands from the player to keep it accurate.
The placement problem underneath
All of this is downstream of a harder question: how confident is the system in your rating in the first place?
Rating systems that model uncertainty explicitly do not need decay as a separate mechanism. Uncertainty grows with time away, so a returning player’s rating moves faster per match until the system has re-established confidence. The rating is never taken away; it simply becomes easier to move. That is a more honest model, and it is what most modern systems do internally even when they present something cruder on the surface.
The reason players still see explicit decay is that uncertainty is invisible and a leaderboard is not. You cannot put “we are now less confident about this player” on a ladder page.
Designing it deliberately
If you are building a competitive system, three questions decide the answer. Is your top tier scarce by design, or is it a threshold anyone can reach? Do your ranks reset seasonally? And is your player base one that plays daily or one that plays in bursts?
A scarce top tier with no seasonal reset and a hardcore audience can justify rating decay. Almost nothing else can. For everyone else, hide the badge, ask for one match, and let people have their holidays.
Images: Rocket League (Psyonix) press screenshots via Steam project gallery.