In Universe

I think the main reason Walt no longer shows up as a main player is because he is being protected by others.

There are two ways he could have returned to the island within the known events of the show:

1. He could have returned with his father as Kevin Johnson Jr.
2. Locke could have brought him back when trying to convince the Oceanic 6 to return.

Why doesn't he return with Michael?

This would never have happened. Michael was going on a suicide mission to try and redeem himself and never would have agreed to such a mission if Walt was part of the deal.

Why doesn't Locke convince him to return?

This would have been more likely and there is in fact a scene where Locke visits Walt. This scene tells us what we need to know about why Locke didn't invite him to come back to the island.

WALT: Hey, John.

LOCKE: Hi, Walt.

WALT: What happened?

LOCKE: I hurt my leg. You don't seem surprised to see me.

WALT: I've been having dreams about you. You were on the Island, wearing a suit, and there are people all around you. They wanted to hurt you, John.

LOCKE: Good thing they're just dreams.

WALT: Is my dad... is he back on the Island? I haven't talked to him in three years. I figured he must've gone back.

LOCKE: Um, last I heard, your dad was on a freighter near the Island.

WALT: So why'd you come to see me?

LOCKE: I just wanted to make sure you were okay.

WALT: Yeah. I'm doing pretty good. Well, I gotta go. It was good seeing you, John.

LOCKE: Yeah. Take care.

[Walt walks off. Abaddon returns.]

ABADDON: I take it you didn't invite him along.

LOCKE: Boy's been through enough.

So Locke decides not to ask him to return with him, simply stating that he's been through enough and he can't bring himself to pull him away from a normal life of school and friends back to a life of being kidnapped by The Others and trying to survive. He also likely knows that Michael is dead and is protecting Walt from finding out what happened to him.

So why isn't Walt in the flash sideways final season?

The most logical answer to me is that he isn't relevant to the story. Michael isn't in the limbo universe because he has become part of the island's energy. Its possible that Walt exists in the limbo universe, but we never see him.

I also like the following fan theory explanation:

Walt, on the other hand, didn’t enter the Church because he had other people to move on with, as he had a long and (we can probably assume) prosperous life protecting The Island. If his mission to “help his father” succeeded, he would most likely move on with Michael, as well.

Epilogue theories

So I should note here that I have actually not seen the epilogue, but read some interesting information on the Lostpedia page for Walt. Walt is offered a "job" by Hurley and it is theorized that that job is taking care of the island. If this is true then it explains why he is not in the final season because he has become immortal like Jacob and all the other characters are being shown after they've died.

Out of Universe

The show's producers, Damon Lindelof and Carlton Cuse have explained why Walt wasn't a bigger part of the show.

Wikipedia

When asked about the production difficulties associated with Walt and possible appearances of the character in the fourth season, co-creator Damon Lindelof stated: "We've always known Malcolm was going to grow faster than we could shoot the show. And we planned for it. Trust us. Please trust us. You'll see [Walt] again. But you're gonna have to be patient. Sorry."

...after he had aged significantly enough for him to look no longer ten years old, the writers' plans were changed, and Walt was written out at the end of season two...

Walt returned to Lost in "The Life and Death of Jeremy Bentham", when Locke visits him in New York. Kelley had stated a willingness to return to the show again, which was realized in "The New Man in Charge".

The age/puberty thing is probably why he doesn't appear in the Room 23 mobisode since it was filmed in 2007 but was set "some point after they took [Walt] off the raft" which would have been when he was younger. So logistically he couldn't have been in the episode.

There isn't anything specific on why he wasn't in the final season/finale, so I think we have to assume that it was a mixture of his character not being relevant to the plot and the actor no longer being part of the main cast.

The willingness was there on the part of Malcolm David Kelley, but it seems like for whatever reason, the writers did not write him into the show.

From an interview in 2009:

Malcolm is ready and willing to go another round with Lost. “I would like to come back for a long stretch, but it’s not up to me. It’s up to the writers.” In fact, after having been a recurring character for seasons two through five, he’d be down with returning to regular-castmember status for season six. “That would be cool.”

Unfortunately it doesn't seem like the writers or producers will ever give an official statement on this but my guess is if you could sit them down and ask them, they'd shrug and tell you he just wasn't that important to the story by then. Could even be that they already had the storyline drawn up without Walt and it wasn't worth the effort to try and write him in.

Hopefully this answer helps. If I ever find any official out of universe statements on why he wasn't included more in the final season I will edit my answer. I'm even planning on listening to audio commentaries to see if there's anything mentioned.