True, but that's a function of sarcasm, which can make "big deal" be its own antonym. The similar meanings of "The wind let up" and "The wind died down" are functions of long-standing idiom.
Funny: I don't see where anyone has mentioned "The wind wound down" or the more confusing "The wind winds down."
I also approached this with a sailor's perspective and immediately thought "the wind lay down" or "the wind lay off." ("Lay" being the past tense of "lies", which is not really the translation of lassen, but does have a similar appearance to ließ. I don't really know if that helps make the association or just confuses, but it works for me.)
I translated the sentence as "The wind was dying down." This is 100% correct English if one wants to express the progressive form of the past tense. I know German doesn't have a progressive form. Nevertheless, if I'm translating from German ---> English, I shouldn't be marked wrong if I use the progressive form, ESPECIALLY when the context is unknown.
I'm not sure about this. I think "Der Wind ließ nach" is definitively in the past. The wind has died. There's nothing to imply that it's an ongoing phenomenon. I'm not disputing that "The wind was dying down" is a valid English construction, but it seems like a liberal translation. If there were a signal word or phrase to give us more information about what was happening, it might be an appropriate translation. I think, for example, "Der Wind ließ nach, als sie hereinkam" might be translated as, "The wind was dying down, when she came in." I'm not totally sure, though. Linguists? Native German speakers?
Yes. It's a little formal, but that should be accepted. "Subside" is rarely used in everyday speech (though, it could be, without much attention). It's the type of word that you might hear in a speech, or that you might see in writing. In a book, the sentence, "As the wind subsided, she returned to the deck," wouldn't draw any attention. But if in everyday conversation you said the exact same thing, it'd seem stilted. Some people might do it, but they'd come off as the type of people who like to go to Renaissance fairs and speak stilted English while talking about mutton and mead. Not to be mean...there's nothing wrong with that, it's just not commonly spoken. If you're a native English-speaker, sorry for my pedantic reply, but maybe it's helpful to others who are trying to make heads and tails of our messy word soup of a language.
I've seen the expression "der Wind ließ nach" in several places before seeing it here in DL. But your suggestion of "sich legen" in place of "nachlassen" seems pretty valid. I get the general impression, though, that "nachlassen" describes a slightly more gradual process.