The knowledge has been lost, but also probably never really existed. The legendary damascus steel had a specific mix of impurities, things other than carbon and iron, but the smiths of the time could not have known of those impurities. They would simply know that iron from certain sources/mines was magically better. When those sources of iron ran dry, damascus steel stopped being a thing. Today it is more of an ornamental pattern than a practical improvement in the blade.

On the opposite side, Japanese swordsmiths worked with very pure iron heavily refined from sources like river sand. It didn't have many impurities, resulting in rather soft steel. That in turn mandated all the folding that Japanese swords are famous for. Damascus steel was good ingredients turned into great steel. Japanese steel was mediocre ingredients turned into good swords.