I planted the Osmanthus about 7 years ago and it's been fine the whole time. It's in the front garden and gets plenty of sun. It can get windy but as it is quite short there has never been any problems. This year lots of the leaves have turned completely brown and mostly dropped off, though the ones that are still green are also dropping off.
I live about 15 min walk from the beach. I suppose it could too much or not enough water.
What I want to know is what should I do now? Leave it, prune it down,or what?

The main osmanthus grown in Britain is O x burkwoodii, which takes a lot of neglect, hence often seen in car parks etc. I have O delavayi, which I barely do anything to either, and I have it in a bed that can get very dry in the summer. There are other Osmanthus which need more attention and protection in the British climate, but which might be OK to grow somewhere like coastal Sussex.

It seems unlikely something as tough as these has died from drought in such a summer as we have just had. I would not in general have thought waterlogging would be a problem in coastal Sussex, but maybe you are in Romney Marsh or somewhere and have actually got waterlogged this summer.

Otherwise it does sound like the plant is dead. Plants sometimes get diseases and just die. Sometimes you can cut back the affected parts and they regenerate next year. I had a Japanese maple that most of the leaves fell off last year, and lots of the wood went crispy, but it has regenerated from the small part that was OK and now looks better than ever.

So cut off any bits where the wood seems to be dead or sickly. Wait until late next spring to see if it recovers. If it doesn't, pull it out.