Why does the number of threats stopped go down?

"On TrendMicro, the list of "Threats stopped" in the past month sometimes goes down rather than up, sometimes by a huge amount in one day. Could this signify a threat that was previously thought to have been stopped but now isn't? Why would it do this?"

This is the normal procedure of this product. It consumes lots of cpu potential and slows down the process. you may use Trend Micro Smart Protection Network for better performance. Also it depends on RAM/Process speed/network bandwidth etc. you may link here to clear the concept, specially on TroubleShoot Chapter

What's the suitable protection level for internet-connected desktop?

I would include an antivirus (which nowadays usually includes an anti-spyware and sometimes an intrusion prevention component), an additional anti-spyware, a software firewall, and a well patched OS.
As far my knowledge first of all Hardening the OS, then properly configure the system (background services and so on) and now search for good Internet Service Provider. Of-course when the matter of Internet there are obviously the question about “Good Anti-Virus and tight Firewall Security”…. Though it is necessary to aware about the below mentioned points also:

1. Restrict internet access.
2. Password protect internet access.
3. Block internet web sites. (any unnecessary sites, or the site which make harmful)
4. Allow one or more web sites while blocking all others.
5. Prevent any user accounts from accessing internet.
6. Schedule internet access for any or all programs.
7. Any internet program can be protected, i.e IE, Firefox, Google Chrome, Outlook, FTP programs, Messengers etc.

Remember that, it is necessary to update regular virus patch and other related software also. And needless to say that, always update myself for security related threats, new virus, and new method of hacking etc….

Malware

Malware, short for malicious software, is programming (code, scripts, active content, and other software) designed to disrupt or deny operation, gather information that leads to loss of privacy or exploitation, gain unauthorized access to system resources, and other abusive behavior.

How Malwares Attack
Malware is a category of malicious code that includes viruses, worms, and Trojan horses. Destructive malware will utilize popular communication tools to spread, including worms sent through email and instant messages, Trojan horses dropped from web sites, and virus-infected files downloaded from peer-to-peer connections. Malware will also seek to exploit existing vulnerabilities on systems making their entry quiet and easy.

How Do You Know that there is a Malware
Malware works to remain unnoticed, either by actively hiding or by simply not making its presence on a system known to the user

What To Do when your computer or file has Malware
Only open email or IM attachments that come from a trusted source and that are expected
Have email attachments scanned by Antivirus prior to opening
Delete all unwanted messages without opening
Do not click on Web links sent by someone you do not know
If a person on your friend list is sending strange messages, files, or web site links, terminate your IM session
Scan all files with an Internet Security solution before transferring them to your system
Only transfer files from a well known source
Use Internet Security software to block all unsolicited outbound communication
Keep security patches up to date

How Computer Viruses Work

My computer is infected with virus. HELP ?

HOW TO DETECT TROJAN ATTACK AND SOLUTION ?

TROJAN & SPYWARES

How to save your PC from threat of viruses ?