Trackpad working poorly on Macbook, why?
Here is what I would do to troubleshoot it (with the help of an external mouse):

Go to System Preferences, then select Trackpad, and make some change on that screen.  Try your trackpad again.  

If that doesn't work, reboot.

If that doesn't work, and if you're using BootCamp (or VMware Fusion, or Parallels), try booting into the other operating system that you have installed on your Mac and see if your trackpad is recognized there.

If that doesn't work, try cleaning off your trackpad.  Give it a good vacuuming, get any dust out from around the edges.

If that doesn't work, then (if you're comfortable) it's time to dig into the innards of your Macbook.  One option is that your battery could be impacting this.  If your battery life on your Macbook has also gone down, the battery itself could be physically bulging out, and it could move your trackpad enough out of alignment that it won't work any longer.  If that's the case, then you need a new battery.  

If your battery is fine, then it could be that you need a new trackpad.  I bought a replacement trackpad from eBay for my old Macbook, and that got me an extra year's worth of life out of that Macbook.  It was a bit fiddly to replace, but it worked.