Probably a combination of all three.
The most obvious problem is voltage drop because the wires are too thin for the current (amperes) used. This causes the lights to be dimmer the farther they are from the transformer and the more lights there are along the line.
Then, in order to have adequate brightness for the furthest light, the transformer probably puts out more volts than the lights really want, so the lights closest to the transformer burn out more quickly.
The most obvious problem is voltage drop because the wires are too thin for the current (amperes) used. This causes the lights to be dimmer the farther they are from the transformer and the more lights there are along the line.
Then, in order to have adequate brightness for the furthest light, the transformer probably puts out more volts than the lights really want, so the lights closest to the transformer burn out more quickly.