If sludge is visible in the bottom of the bath then it is also floating around in the bath.
Which also means that it is settling on the surface that you are trying to polish.
This interferes with the current distribution and there fore the uniformity of the polish.
One issue with these baths (and pickle as well) is that it isn't just the composition but also the oxidation state of those constituents.
Sometimes when baths form sludge or 'go dead' it because the chemistry shifted just enough for oxidation states to change. In some cases there are additives to address this.
I could understand that as the bath is operated, there is an increase in the metal concentration, specific gravity and the electrical resistance of the electrolyte.
Moreover, the acidity of the electrolyte decreases and oxidizers or additives are consumed.
In addition, the water too is lost by evaporation and electrolysis.
So, which among these factors would be contributing more towards the decrease in the electropolishing quality?