It sounds dated because it is.
In truth, I think it's really quite rare that something can withstand the test of time. Honestly, many of the things that we think have passed the test actually haven't - we're just living in our own little bubble of nostalgia. That is not to say that many things aren't good - but they certainly aren't timeless.
First thing - "timelessness" really isn't. The groups and songs that were well-known and are still well-known today - outside of some genuinely good musicianship in some cases - it feels as though the popularity is artificial. Music is passed down through generations ("music Y these days is terrible, son - listen to some good old Jimmy Y") or becomes part of a social habit or cultural sphere (hard to find a jukebox or a karaoke bar without hearing Journey) or becomes popular for other reasons ("I saw jam band Z live in concert 7 times, those were the good times man, music isn't what it used to be"). It's not timeless, it's just re-perpetuated. Popular music is marketed to have this appeal, as self-perpetuation is the end goal in that case. It isn't music, it's all rose-tinted glasses and member berries.
Second thing - rock as a genre is dated. I'll get a lot of flak for this, especially here, but dude - we're old. I love Iron Maiden and Yes and Rush, etc, but that's not the world we live in now. I don't think it's so much that some prog rock sounds dated as much as it is that most rock is now dated. It's become classic classic rock. It's a different sound, a different time, with different instruments and techniques; people on Talkbass will always have gigs playing old cover songs, but outside of our bubble music is changing.
Third thing - recording techniques, compression, and instrument mix (before the board). Music can sound dated today if it's not hi-fi, doesn't have today's bass response range, and isn't mastered in a very compressed way (loudness wars). You might be picking up on a little bit of this, albeit subconsciously.
So yes - you're right; if you had grown up with the music, you might have a higher nostalgia factor for it, which would have contributed to you liking the music. I'd say consider yourself lucky for not going through that, as you can discover what you like and don't like without the rose-tinted glasses of days gone past.
We use the term “dated” as a sort of declaration of mediocrity or lack of merit but how can it be? Are we confused about when Beethoven’s music was written? Does it’s era make it redundant? Why do we think that music that belongs to the past is somehow inferior because we notice how old it is?
If only modern music has merit then we are all doomed eventually to be irrelevant.
Speaking as an historian, I think there are some valuable thoughts here. This thread evokes for me the foul cliche of undergrad history papers, that so-and-so was "ahead of their time." There is no such thing as being "ahead of one's time"; everyone lives in one's own time and is shaped by it. What that phrase REALLY means is that the writer finds something about the historical figure that they happen to like or admire, and that the writer is sufficiently ignorant of the figure's time that they can't understand how his time produced him. "People back then were stupid, this guy was smart, therefore this guy was ahead of his time, because he's smart like me!" - not realizing that the assumption of people back then being stupid is not exactly evidence of smarts on your part...
Likewise, dismissing something as "dated" is the flip side of that same presentist coin. "This was made in the past, I don't like it (now, in the present), therefore I dismiss it as relevant only to its own time." To be sure, there are some aspects of life where timeliness is the essence of the pursuit. Fashion, for instance; the whole game of being fashionable is being attuned to what people will admire NOW. You don't want to get caught wearing last year's look, as that means you "lose the game." You can say something similar in music, if you're talking about the
popularity of music - you can say that the wave of popularity for 70s prog was specific to its time, and that popular tastes have changed, so that later bands doing similar things (like Spock's Beard or Porcupine Tree) don't reach the same level of popularity as Yes or ELP.
That doesn't amount to much as a critique of the music
itself, though. I can understand a record producer not wanting to invest in an act because he doesn't think he can sell it, the music they make is the kind of thing that would have sold thirty years ago but not today. But that doesn't mean it's inferior music. It may still be vivid, expressive, evocative, creative, virtuosic.
And, of course, there's the phenomenon of the classic, the revival, the retro. The present constantly pillages the past for raw material, in every field of activity. When something that had been unfashionable becomes fashionable again, we then decree it "classic" or even "timeless." Of course, it isn't. Such pronouncements have nothing to do with any quality of the thing in question; they are purely statements about
ourselves, that we find something about this old thing that we have decided to like. For now.