The form did not drop, mate. It was just that Bayern (correctly in my opinion) started resting players and taking their foot off the gas which was 100% the right decision to make.
Losing to Augsburg and Dortmund means absolutely nothing when you have the title wrapped up already. Pep was 100% in the right in rotating as much as possible etc etc.
The fact that Bayern ultimately lost, does not in any way mean that being rested for big CL games is a bad thing
There are other factors at play in football, and Real Madrid were also in very good physical condition at the time, plus they had the tactical edge over a quite stale Bayern style of play. In my opinion, Real Madrid are also superior to Bayern in the player-for-player department. RM have more star-power than BM and it showed in the tie last season.