Why is there a density dropoff in the stellar winds of magnetic O-type stars?
Conservation of mass?

In a steady-state wind, the mass loss rate through each shell is the same.
$$ \frac{dM}{dt} = - 4\pi r^2 \rho(r) v(r),$$
where $\rho$ and $v$ would be the density and velocity of a spherically symmetric wind, with a fixed mass-loss rate $\dot{M}$.

Thus for a fixed wind speed you expect the density to fall as the square of the radius in spherically symmetric wind - and it looks to me that a little outside the closed field loops then spherical symmetry is approximately recovered.

This alone, would not account for the sharp drop off in density seen, but the other factor is that a radiation driven wind accelerates with radius when close to the star, which exacerbates the decrease in density. Typically, $v$ would increase by a factor of a few between say 1.5 and 5 times the radius. Multiplying this by a $r^{-2}$ factor would give a factor $\sim 100$ decrease in density overall.

The behaviour of the temperature is much more complex, governed by heating and cooling processes and the expansion of the gas.