The y axis shows the average distance covered (as in the distance moved by all players of the team) over the last 34 games. Cutting off part of the axis is a valid concern, however in football teams always cover roughly around 110km to 120km per game, so in this case it wasn't done in bad faith.
In general this distance covered stat isn't straight forward to read, because running more doesn't necessarily mean you play better. As an example it's typical that dominant possession teams run a lot less total distance, but are relatively far up in terms of # of sprints/intensive runs, because they mostly make the opposition chase the ball and only make small sprints to "gegenpress" after turnovers or to make themselves available as passing options.
But in this case it looks a bit like putting 2 and 2 together, since the personnel has not really changed in three years, the drop already started before Hütter took over and there is talk even from the club itself, that players aren't quite fully committed.
And there is also this chart (albeit with a small sample size), that shows y = distance covered difference (compared to the opposition in one particular game) and x = # of sprints difference (for that game):
Again it's only 14 games, but you can see that Gladbach's PpG is 2.2 (not losing a single game) when they covered more distance than their opposition and 0.75 when they covered less.
This isn't exactly scientific analysis, but just taking a superficial look at this charts it seems that Gladbach are one of the teams where distance covered and success are actually correlated. Which brings us back to the dip.