There's nothing wrong with leveling. Leveling can be fun, GW2 leveling is a lot of fun, because enemies are challenging and dynamic and there's lots to explore. The reason why people dislike leveling in WoW is because the content is static and repetitive and at this point anyone who has done all the quests once generally dungeons hops all the way to lvl 85.
So it's not leveling in itself which stops people, it's what you do while leveling which sucks, it's still stuck in an Everquest grind mentality against static enemies, unlike GW2 or Firefall or whatever else is new out there.
People also don't come back because max level also means grind. Grind every few months for new PVP gear, new PVE gear, whereas other games let you just jump in the fun and kill shit without worrying about a million stats being up to par with the latest spreadsheet dps and survivability requirements and all the gems and the enchants and more grind grind grind just to pay for it all. I know 3 people who used to be hardcore WoW players all of them ask me why I still play, and my reason is always "because I like the lore", and they always tell me they can't be bothered with the grind requirements to have any fun in this game. THAT's a real reason which I'm sure many other people share.
Everquest was 16 years ago, this grind mentality to give a semblance of power is keeping a lot of people away, not because people want "instant gratification", but because people do want instant fun. Dude comes from work or school or whatever and he gets to choose between jumping in a massive world BG in GW2 and having chaotic fun or grinding 8 more pieces of PVP gear just to be competitive in PVP after he's done that for the last 9 years. Think he'll feel like coming back to WoW? I daresay not, and I can understand.
People also don't come back because content gets done fast and after a month of a major patch there's nothing left to do besides do the same content on higher difficulties, which doesn't really mean higher skill but just higher gear checks. Don't tell me how hard it is to clear a heroic raid, I did heroic raids in WOTLK, besides the extra few gimmicks and requirements to get out of the fire faster they were just gear check 2.0. Wipes happened because of the same reasons: healer running out of mana, tank not having big enough HP pool at the critical moment, people standing in fire 1 second too long, DPS not understanding their classes and doing subpar DPS because they copy paste everything from a DPS website without understanding the underlying principles of a spec.
The only skill content is PVP, although higher arena ratings means who has the best CC rotation and can hump the pillars best while their DPS builds up a DPS burst, and rated BGs are good there's nothing really to criticize there. But what about the people who don't play WoW to PVP, what do they get to do. Grind more farm grind more mounts grind more achievements which is all a grind and never a skill challenge.
Get in touch with reality blizzard, people don't find leveling the biggest challenge, you're using the wrong term. There is nothing challenging about killing static enemies for 90 levels, and you're making it an even bigger grind next expansion with ground mounts, that will deter even more people from coming back.
Your game is not challenging, it is grindy, and that is what makes people refrain from coming back.