To understand why phone batteries discharge faster with time, we need to understand how the phone battery works.
In a phone battery, there are two components that are important, a negative electrode (called anode), a positive and electrode (called cathode).
When you charge your phone you are simply applying charge to the electrodes. There is conversion of electrical energy into chemical energy. Same thing happens when the phone discharges (when it is not charged), charge moves from one electrode to another.
Now, remember the second law of thermodynamics that says when energy is converted from one form to another a part of the energy is lost (wasted). The proportion of wasted energy to stored energy grows over time. The more you use a battery, the more energy gets wasted, and the sooner the battery will reach a point where it’s dead and can’t usefully be recharged.
This is the reason why battery discharge over time.