During Tumblr's peak heyday (~9 months before the sale iirc), Tumblr's daily posting volume was around 1/5th the size of Twitter's at the time. Keeping in mind that Tumblr had no character limit and much greater multimedia support, the amount of content being posted on Tumblr was quite significant.
It was a widely-used general-purpose social network / social publishing platform. Most major brands had a presence on Tumblr, and for a while it was extremely common to see a Tumblr icon on their sites right next to Facebook and Twitter icons.
From my POV as an early engineer there, what went wrong was poor execution in response to many simultaneous existential threats:
* Instagram succeeded at peeling off all the "just want to post photos on mobile" users, and also became the hit new thing with the teenage users
* Pinterest succeeded at peeling off all the "just want to digital scrapbook" users
* Although the porn percentage was relatively low at the time, it still scared advertisers
* Difficulty fundraising / running low on money at particularly bad timing. Facebook's stock performed poorly for its first 15 months post-IPO, and this temporarily made fundraising difficult for existing social platforms... especially when growth was relatively flat (due to the first two bullets) and revenue was disappointing (due to third bullet).
* Ever-growing tech debt. The early team was extremely solid, but very small relative to the amount of traffic, so we often had to creatively cut some corners. Later on, management didn't want to allocate staffing to fix existing things, and a lot of time was wasted on unrealistic big-bang rewrites that were abandoned. Meanwhile the hiring bar kept being lowered over time once the company was no longer a rocket ship.
I left just before the Yahoo sale, as working at Tumblr had gone from my dream job to a stagnant grind during my tenure there. I later returned for another year in the late-stage Yahoo into early Verizon days, with idealistic hopes of helping to prevent a Vine-like fate, but let's just say that was a poor personal decision and leave it at that :)