To downgrade the domain/forest functional level there are no GUI tools, but we can use the PowerShell command available in Windows Server 2008R2/2012/2012R2 for our requirement.

Get the current domain and forest functional levels

Using Get-ADForest PowersShell command we can determine our current forest functional level.




Also, right-click on the "Active Directory Domains and Trusts" and select the "Raise Forest Functional Level". Confirm that there is no option for downgrading the forest functional level.





Now we can use "Set-ADForestMode" to downgrade the functional level of the forest.

Once we run this command, it will prompt for the domain name. (In this example, it's mydomain.local.) Also, we have to enter the forest functional level. (In this example it's Windows2008R2Forest.)



Now we can check our forest functional level from the GUI or by using the same "Get-ADForest" command.




Downgrade the Domain Functional Level

Using the "Get-ADDomain" PowerShell command or right-click on the "Active Directory Users and Computers" to check the domain functional level.



After that, we can determine the new domain functional level.




* NOTE:
If you have enabled the Active Directory Recycle Bin feature you won't be able to downgrade your functional levels. Also, AD Recycle Bin won't be disabled, once you enable the feature.