Rapidly rotating neutron stars blow a relativistic, magnetized wind mainly composed of electron-positron pairs. The free expansion of the wind terminates far from the neutron star where a weakly magnetized pulsar wind nebula forms, implying efficient magnetic dissipation somewhere upstream. The wind current sheet that separates the two magnetic polarities is usually considered as the most natural place for magnetic dissipation via relativistic reconnection, but its efficiency remains an open question. Here, the goal of this work is to revisit this issue in light of the most recent progress in the understanding of reconnection and pulsar electrodynamics. We perform large two-dimensional particle-in-cell simulations of the oblique rotator to capture the multi-scale evolution of the wind. We find that the current sheet breaks up into a dynamical chain of magnetic islands separated by secondary thin current sheets. The sheet thickness increases linearly with radius while the Poynting flux decreases monotonically as reconnection proceeds. The radius of complete annihilation of the stripes is given by the plasma multiplicity parameter at the light cylinder. Current starvation within the sheets does not occur before complete dissipation as long as there is enough charges where the sheets form. Particles are efficiently heated up to a characteristic energy set by the magnetization parameter at the light cylinder. Energetic pulsed synchrotron emission peaks close to the light cylinder, and presents sub-pulse variability associated with the formation of plasmoids in the sheet. This study suggests that the striped component of the wind dissipates far before reaching the termination shock in isolated pulsars, even in very-high-multiplicity systems such as the Crab pulsar. Pulsars in binary systems may provide the best environments to study magnetic dissipation in the wind.