What happened how did they lose all that?
The Persians were at their peek under Cyrus the great, he marched into Babylon (The greatest city in the world at the time) and destroyed the Babylonians in 539 BC. Cyrus was a general and a King so he knew how to control his army, he expanded the Empire flawlessly until he died.
200 years later The Empire was to big to control, although they had more man power then every army known until this point, some say 2 million but unlikely that much, possibly 1 million though, nevertheless the armies where not divided into races but rather every man randomly placed into position and this was their big mistake, that is why they were defeated by Alexander the Great between 334 and 331 BC