The woody stems are natural. Basil always does that. And the new growth looks perfectly healthy.

You have rather a lot of plants in the container and I think one problem is too many plants for the volume of mix. Also the container isn't filled to the top so has even less in it.

Then there's the question of how old the plants are. If they are woody, presumably they have been there a while. Basil is an annual and will not keep going indefinitely. If these were mine I'd just harvest them until they peter out. Meanwhile sow some more.

Watering once or twice per day with that little bit of direct sun suggests that part of the problem is with overwatering and soggy root/soil system.

Leaf drop and yellowing are pretty classic signs of over-watering on sweet basil. The soil should not be soggy.

How may plants are in there? If the young plants are getting woody, it might mean that their growth is stunted because the bigger plants are out-competing them for nutrients and root space. That stunting would be affecting the big plants too, but the younger ones moreso.

Hi guys, thanks for all the comments!

The Basils have been around for around 3 months since being brought back from the nursery. Older ones flowered once which I pinched away.

Often at the end of the day, the soil is cracking dry, I guess it might not have been overwatered? But the leaves are definitely getting smaller compared to when I first got em.