My father-in law (87) seems to be overwhelmed easily these days, seems unable to focus on simple tasks and is more frequently absentminded and forgetful. However he can still follow and participate in fairly complex discussions about politics and economics. He is nearly completely deaf but can lip read. He is unsteady on his feet and small tasks like making toast seem almost too much for him. All of the children have been taking turns being at the house since his wife died a month ago. He wants to continue to live independently and drive but we don't know what to make of this foggy behavior. I must also mention that I noticed it last winter, well before his wife became ill. We really are at a loss as to how to begin to evaluate the situation.
One thing that can cause a wide variety of cognitive and emotional symptoms is a UTI, but considering how long ago you noticed this that seems unlikely to me. (I am not a health care professional, so take that for what it is worth.)
It may be that FIL can continue to live independently, perhaps with some help such as delivered meals, a homemaker service, a visiting nurse. But driving seems more questionable. You'll all feel better and can begin planning for the future once you have a clearer picture of what is going on. FIL is lucky to have caring relatives to advocate for him.
Deanna