There is no reason to suppose that realism is the measure of quality in art. Just as we don't suppose that art declined from the mid-19th century when the avant-garde pretty systematically turned away from realism. Likewise there is no reason at face to suppose that a turn away from realism in the Middle Ages represents artistic decline.

Some recent posts have covered this very nicely. In particular /u/Guckfuchs's excellent discussion on the turn to abstraction in art from late antiquity, as well as their discussion of late Roman imperial portraiture. (I have given a few further examples of realism in medieval sculpture here.)