OBN, I agree that people are looking for safe alternatives. That said, IMO, the first reason OC MD is drawing from as far away as NY is that it's a really nice place. It's got everything a family would want. Plenty of nice hotels, or rental condos, great beach, good restaurants, reasonable prices, and lots of family friendly activities. It's got to be the Miniture Golf Capital of the east coast! Next month they host the Maryland Kite festival, which is a lot of fun for kids.
AC NJ isn't a family beach vacation destination. The beach, at best, is a Casino Hotel amenity. People come for the casinos and there happens to be a beach there. The beach itself in AC is nice. The Boardwalk is a throwback to an earlier time, so the place has some stuff going for it. One block west, it's a different story. AC has some other attractions but again, because of it's problems one has to be careful and aware. No different than any other big city.
A few miles south and it's a different world. Million dollar plus beach homes line pristine beaches. As you go south the towns are a mix of party towns and dry towns. Millions are spent to get the wholesome image out to the masses. All have super clean beaches and are prime vacation spots.
Speaking of NY vacationers moving further south. 20 years ago, Long Beach Island, which is about 25 miles north of AC was the northern most beach populated primarily by South Jerseyians and Philadelphians. That's flipped now and New Yorkers, if not the largest population, are now a significant force. Bars and restaurants now are as likley to display Yankees/ Mets/Giants/Jets banners as they are Phillies/ Eagles. Relative to the toney beach towns further north the homes on LBI are a bargain. Even with their million dollar plus price tags!