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Marlyand, Long Island, and upstate New York are the hotbeds. Though it stretches a little further than that. Penn., Jersey, Conn. Mass. & Delaware all have at least a few high school teams, and UVA and North Carolina are pretty good college programs, though I dont think below northern Virginia you'll find many HS programs.
Only in Maryland (particularly right around Baltimore) is it really pervasive, its pretty big in New York state, but there are some places in Maryland in which it is pretty much the #1 game in town.
Its definatley growing though at the HS level, there are a lot of Canadian players (though there always have been), and there are more and more HS & college progams further west. Ohio, Indiana, Michigan, Colorado & California lead the way.
I think the knock on it has always been that its an elitist sport. Played mainly in private high schools, and (generally) private eastern colleges. In many places this is very true. Another knock has been that as great a game as it is (and I played in HS in Jersey, & I love it, so I'm, not bagging it). Is that as a lower pecking order sport it doesn't necessarily attract the best athletes.
This is not to say Lax players aren't athletes, and the best of the best like the aforementioned Mike Powell, and the Gait brothers aren't great athletes. But in most towns the best athletes when choosing what sport to play in spring wind up playing baseball or basketball (at least that's the way it was in my town).
Also, because its an "elite" sport, played largely by middle & upper class people without a high paying pro league there's no incentive to stay in it beyond love of the game. With other better paying career choices many of the best don't stay in the game beyond college.
That said the college game is great, but is (as are most men's sports outside of major program football & basketball) threatened by Title IX, and we will probably see it shrink rather than grow, unfortunately.
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