Or they are so spread out that it takes years to recall Starfleet's outer fleets from the various borders and the loss of 40 ships, either from the reserve, or some of the new replacement ships, might be enough to cause the Federation to be at a disadvantage on the Cardassian border when combined with the need to patrol the Romulan border seriously for the first time in many decades. Add to this the "new threat" of the Ferengi, and you start to get a Starfleet that is spread a bit too far that they have to scrap the bottom of the barrel for a 22 ship blockade only a year after Wolf 359 and still they seem short of ships until basically a year before the Dominion invade the Alpha Quadrant, and the War with the Klingon Empire where they start losing starships to the Klingons again. By six months prior to the invasion, Starfleet seems to have finally started to regroup in the core so they can redeploy to the either the Cardassian or Klingon borders. But it seems like it took years to do that.
As for Picard's actions, it might have to do with the technological improvements of the Galaxy and Nebula class starships more than anything else. The older ships seem to be more evenly matched with the Cardassian Galor class, with the seemingly rare Ambassador-class being probably one of Starfleet's few superior ships types from the previous decades. The Constellations were underpowered. The Mirandas are really old. The Excelsiors might be able to hold their own, but we can't be sure of that. The other newer ships don't seem to worry the Cardassians too much other than the Galaxy class and Nebula class. Though to be fair, we don't know what anyone in universe things of the First Contact ships, nor when they were actually produced. They might be the anti-Borg fleet. They might be the new ear combat ships designed to counter the Dominion. They might be the previous generation of starships that were built to rebuff the Cardassians during that war. We just don't know much about those ships, nor the other classes of random ships Starfleet had at Wolf 359.
As for Picard's actions, it might have to do with the technological improvements of the Galaxy and Nebula class starships more than anything else. The older ships seem to be more evenly matched with the Cardassian Galor class, with the seemingly rare Ambassador-class being probably one of Starfleet's few superior ships types from the previous decades. The Constellations were underpowered. The Mirandas are really old. The Excelsiors might be able to hold their own, but we can't be sure of that. The other newer ships don't seem to worry the Cardassians too much other than the Galaxy class and Nebula class. Though to be fair, we don't know what anyone in universe things of the First Contact ships, nor when they were actually produced. They might be the anti-Borg fleet. They might be the new ear combat ships designed to counter the Dominion. They might be the previous generation of starships that were built to rebuff the Cardassians during that war. We just don't know much about those ships, nor the other classes of random ships Starfleet had at Wolf 359.