Bagworms on Arborvitae
We looked at your photos and did not see evidence of bagworms. You can look on the tree for small pinecones moving around among the foliage. Maybe we cannot see them because the bags are small. They cause defoliation. Take a look at our website for photos and more information. https://extension.umd.edu/hgic/topics/bagworms-trees-and-shrubs
If you do not see evidence of bagworms, then you are most likely dealing with a root issue. We have had a lot of moisture the past year and this affects the root system. Also, look around and make sure there are no downspouts dumping water in the area. If so, divert to the lawn area if possible.
At this point the tree looks like it is in bad shape and will not recover. If the interior needles have been eaten or gone do not expect growth in the interior. The tree may put out a little bit of growth each year but may never completely fill in.
Since this is in a prominent location we recommend removal.