(Long-post-while-at-work-and-bored alert.) It seems pretty clear to me that the issue was two-fold this go-round: a lack of continuity and a lack of the kind of super-high-end talent that often lets the team work around a lack of continuity. The emphasis on continuity of program was one of the major institutional upgrades that was made after the last time the US had a similarly rough finish in a World Cup. For a variety of reasons (plenty to speculate on there), that really eroded this time around, and the roster was full of newcomers.
Even though it's clear that Kemba Walker is a better player in a vacuum than, say, Patty Mills, Patty has been playing with FIBA rules and with the Australian NT system and players for a LONG time. You'd rather have 2019 Harrison Barnes than 2019 Luis Scola if you're starting a team from scratch, but Scola has been dominating these tourneys in the Argentinian NT context since before Barnes was playing basketball. That continuity (or lack thereof) just makes a huge difference, and other World Cup or Olympics teams from recent years have had guys who played FIBA ball together (the 2010 team is the big exception; more on that team in a second). This team didn't have those hold-overs.
Back to that 2010 team. That group had a similar issue: a ton of the Redeem Team guys from 2008 had pulled out for a variety of reasons, leading to a totally new roster. I remember that there were A LOT of questions about the team's play style being too ISO-focused, which were primarily based around the fact that they hadn't played together before (much like this year's group). However, just a glance at that 2010 roster compared to this year makes it clear that, while, yes, Team USA was easily the deepest team talent-wise in the field this World Cup, there just weren't the super high-end isolation options that let the 2010 team dominate despite the lack of flow. When things broke down in 2010, Kevin Durant just scored. Westbrook, Kevin Love, and Derrick Rose all could create for themselves at a high level. When things broke down this year, Mitchell, Walker, and other guys off and on had to take on a pretty heavy isolation burden, and they just weren't able to score consistently in that situation.
There are certainly other things to nitpick, and plenty of complexity to delve into (I was particularly surprised by how poorly the big-man shooters on the team shot; I figured that they would be a huge weapon for the team, and, instead, they weren't a factor at all). But honestly, the US has dominated recently through a combination of familiarity with the team/system and with the obvious talent disparity. When the familiarity went out the window this time around and the talent disparity wasn't nearly at the level that the National Team has had in the past, they had some struggles.
(RE: this team being favored to win the NBA title. Maybe? I mean, it's not a given, for sure. This year the NBA is a bit more of a crapshoot than it's been in a long time, but I'm not sure I'd take this roster over the Clippers, say. Would you take them against the healthy Warriors of last year or the year before? I definitely wouldn't. And that's assuming they had the practice time a normal NBA team would have. With the lead-up time they had for the FIBA tourney? Absolutely no chance, even against some relatively mediocre playoff teams (for instance: Pop's Spurs).)