According to Osho, Nietzsche declared 'God is dead' because the man-made, institutional God of scriptures and temples had outlived humanity’s consciousness. Announcing its death shattered dependence on a cosmic father, ended priestly games, and cleared space for a new maturity—the self-reliant 'overman' and a renewed, contemporary vision of the divine grounded in love for man.
He meant the old, imagined God no longer fit, so people should stop leaning on rituals and authority and grow up to live responsibly and lovingly.