While the soil should be kept as evenly moist as possible, exactly how do you define 'watering regularly'?

Our sprinklers go off every other day. This area is set for 15 minutes a session.

That really says nothing about the actual amount of water a plant is receiving- water pressure and various emitters have so much variability. To measure accurately set down an empty can within sprinkler range (perhaps toward the back on that border/block thing) and see how much water the plant is actually getting during those 15 minutes. Then immediately after the sprinklers finish dig down at least three or four inches and see if the soil is wet at that depth.

Depth of watering is more important than frequency.

Frequent, shallow watering encourages roots to stay at the surface where they are far more prone to drying out in hot sun or injury. Deep watering encourages deep growing roots that can sustain a plant during hard, dry times and that is your goal.

Even then mature plantings like those of either side of your hydrangea
can really suck up and hog the water, so maybe feel the soil again after
a few hours.

It looks to me like it's growing a little crooked because it's crowded, but does not look deathly ill or anything. South facing against a white house (hot/sunny), crowding by other shrubs, and frequent overhead watering all could potentially cause issues. The fact that there was no growth on some branches is no big deal--it's
common that a few branches are killed by winter cold (I see that you're
in zone 6; what part of the country are you in?).

What are your main concerns? That it looks scraggly? The brown spots on some leaves? Are the hydrangeas you're comparing it to the same types?

Lalala, it's very puny and slow to grow, there are some damaged leaves, and there was an enormous amount of dead wood... None of the other hydrangeas in the yard look like it! I thiiiink this one is the same as another lacecap in the backyard that is extremely healthy, but gets more shade. (But not positive!) I do wonder if the sun over here might be too much?

I'm in central Ohio. Also, the sprinkler system hits it at dirt level, so it isn't overhead watering.

I am going to fertilize and cut back some of these evergreens. The peonies on this side of the house were AMAZING in all this sun, so I might try to swap this hydrangea out to a more sheltered spot and replace with a peony from another part of the yard.

I would suggest checking your soil. I ordered a soil test kit from Amazon. It checks for NPH (nitrogen, phosphorus and potasium). To my surprise, i found that my soil is nitrogen deficient

Virtually ALL soils will register as nitrogen deficient!! It is the most unstable and mobile and readily consumed of any of the major plant nutrients and will test out differently at different times of day, different times of the year, under different temperatures and after a good rain fall. Because of that, most professional soil labs do not even test for it. The fact that home testing kits do should tell you something about their accuracy :-) Hardly worth the money you spend on them!! If you need a soil test, make the effort and the expense to have a professional test done.