Vettel should have moved 21 points ahead of Hamilton at the German Grand Prix, but will instead head to Hungary 17 points behind the Briton after his dramatic retirement at Hockenheim on Sunday.
The four-time champion crashed off in the slippery conditions and, to make matters worse, his rival Hamilton sealed a famous victory from 14th on the grid.
“What an unbelievably dark day for Sebastian,” Rosberg said. “It was surely one of the darkest moments of his whole career.
“It was his home race, he had the chance in his hands to win and take a big lead in the championship, but he chucked it away in the wall.”
Vettel has been found wanting in the heat of his championship battle with Hamilton. His potentially title-deciding mistake on Sunday was his seventh high-profile error in a little more than 12 months. During the same period, Hamilton has not made a significant faux pas, and it is proving the difference between the two quadruple world champions.
Ferrari team principal Maurizio Arrivabene did not mention Vettel by name in Ferrari’s post-race press release.
The Italian team headed into Sunday’s race rocked by the news that their 66-year-old chairman Sergio Marchionne had been stood down from his role through illness.
“In what was a particularly fraught weekend for Ferrari, it would have been important for us to bring home the win,” Arrivabene said. Perhaps tellingly, he added: “Our car had shown it was up to the job.”
Vettel is paid £38 million a year by Ferrari, but his mistakes are costing both himself and the team dearly.
Despite his demise, it still required all of Hamilton’s brilliance to claim the 66th win of his career.
“Never write off Lewis because he always comes back, and that is a fact,” added Rosberg, whose relationship with his former team-mate remains frosty. “He showed it again on Sunday by taking home the win.”
Hamilton’s championship defence had been derailed by a mechanical failure in Austria before he was taken off by Kimi Raikkonen on the opening lap of the British Grand Prix a fortnight ago. His car then broke down in qualifying on Saturday.
“It’s too early in the season to ever really feel like it’s slipping away but it never feels good when you face adversity,” Hamilton said.
“It felt at one point that, jeez, there was a steep hill for us, but the longer you endure it, the stronger you grow.
“I guess it is a crucial point in the season. It has been up and down, back and forth, but the mistake from Sebastian has been a benefit for us and Mercedes.”