It's more accurate to say that the American video game market collapsed. Video games were still going strong in Japan, as they were (on computers) in Europe.

We absolutely are drowning in that level of garbage, if not moreso. There are some differences though:

• Buying a game (to know what you're getting) is a much smaller commitment these days
• There are (as you mentioned) reviews to read these days. There weren't reviews back then; at least not readily-accessible reviews. This makes it so much easier to know if you're getting something closer to a gem or closer to junk.
• There are so many cheap options available, mostly because it's low-risk to release digital games. You can get new full games for $20 these days. Back then they cost the equivalent of $100 or something crazy like that because of all the logistics around building cartridges, shipping them, and storing them.
• There are so many games to play, so it's incredibly easy to find something else. Back then, you had a handful of games, and got maybe 3 games a year. If you got junk, you were stuck. If all you had was junk every time, you found different hobbies.

I mean, your own mentioning of looking for "mostly positive" reviews suggests that you intuitively know how much crap is out there. Start sifting through games without looking at review scores, and you'll see how much crap is out there.

Also, there were all kinds of ET-level crappy games on the NES with Nintendo's supposed "Seal of Approval".