"Watered down" is a bit of a loaded term. D&D's character creation is definitely more limited than 3e, but that's coming from 3e. 5e's character creation is still much more open than its closest historical parallel (2e), or other genre, non-universal games.
While I do miss some of the variety and the cockamamie mechanics you could cook up in the heyday of 3.5, I don't miss the trap builds, the stringent PrC requirements, and the towering stacks of bonuses you carefully had to construct to survive and thrive in high-level environments.
However, I'm glad that they've loosened the requirements to "do stuff." In one Unearthed Arcana article, they made what they called a 'bad' feat. It had some very interesting design notes...
Unearthed Arcana: Feats:
The ability to knock aside an opponent’s shield is nifty — but that’s something any character should be able to attempt. Locking that down into a feat threatens to limit the game’s flexibility. You could argue that anyone could still try that trick , but the way the feat frames the ability makes it sound like only characters with this feat can succeed. This option is an area that I’d want DMs to adjudicate on their own, rather than bloating the game with fiddly rules.
As RosstoFalstaff indicated, characters are much more capable at their baseline. A fighter with decent Int and proficiency in Arcana is perfectly knowledgeable about magical beasts, and every character is assumed to be capable of handling the average rigors of adventurous travels and battle with monsters. But those skills and tools allow those characters whose knowledge and skills have been well (or fortuitously) chosen to excel when it matters - when the characters have to go above and beyond the normal adventuring rigor.
It took me awhile to come around the system used in 5e (originally experimented with in Star Wars: Saga Edition), but with the flattened math, the binary between "I can do this" and "I can maybe give it a go" makes skill proficiency a much more meaningful decision. 5e simply doesn't
punish you for not having proficiency in Survival or Perception, allowing you to have a fair chance of success on the back of your Wisdom score and the moxie of your dice, making the bold assumption that your character is a competent adventurer of some stripe. It doesn't put the burden of that base level of competence on your extremely sparse character building resources, like previous editions did. Your character can camp in the wilderness, tackle a goblin, try to bluff a bouncer, or puzzle out some kind of arcane trap, and have a reasonable chance of success, but having someone proficient in that area or with high attributes that will help the check will have an appropriately much higher chance of success.
It's important to know that granularity isn't the same thing as variety. In 3e, for instance, the way that skills worked was primarily binary - either you had a skill to such an excessive degree that it wasn't opposable, or you didn't bother to take any ranks in it. The necessity of certain skills (Spellcraft, Concentration), the requirements of Prestige classes, and the relative paucity of available skill points to most non-skill classes made skills largely a non-factor, and made allocating all those skill points a non-impactful burden during the leveling process rather than a reasoned choice.
Other games without level striations have these same quotas, but they are more well hidden. NPCs have skill benchmarks you have to meet or exceed, or certain mechanics "kick in" or become more likely to work when you pass certain thresholds. D&D 5e just shorthands that by saying, "If you're proficient, you've allocated sufficient resources to make a meaningful difference."
You've also noted that 5e also delays some choices that many people would consider "character generation," often putting subclasses back to 2nd or 3rd level, except in the case of Warlocks and Sorcerers, whose power is innate. Delaying these subclasses is a clever move, I think, especially with the curve of the XP chart. You'll go from 1-3 very, very quickly, giving you a nice sampling of that early-level danger and giving you a few sessions to lock down your character before diving into the subclass of your choice. I consider choosing subclass to be a part of character creation.
There are definitely valid complaints about 5e's character creation and advancement, though. I could definitely see a half-step between Full and Partial proficiency, and more decision points in advancement trees. The character you make at level 1 doesn't have a lot of opportunity to pivot to new mechanics (although multiclassing is much, much more viable now, especially as a spellcaster).
However, some would call that a feature and not a bug. You've got to "commit to the bit," and take hold of your class and its mechanics for all they're worth. And you have to rely on your teammates to cover your weaknesses, which are, to a degree, enforced by the system.