The defeat means that Nuno Espirito Santo's side is now just three points ahead of Cardiff City after the Bluebirds edged past Birmingham City.
Fulham left it late to beat Preston North End 2-1 to maintain its superb run, Hull City emerged victorious from a seven-goal thriller with Norwich City and Middlesbrough moved into the top six with a 3-1 victory over Barnsley.
There were wins for Millwall and Queens Park Rangers over Brentford and Sunderland respectively, while Leeds United drew 2-2 at Reading and Bolton Wanderers snatched a late point at Sheffield Wednesday.
In the day's other games, Burton Albion and Bristol City and Ipswich Town and Sheffield United played out goalless draws.
Wolves fell to their heaviest defeat of the season as Steve Bruce's side ran riot at Villa Park.
The visitors' Diogo Jota cancelled out Albert Adomah's early strike, but James Chester restored Villa's lead after the interval.
Lewis Grabban and Birkir Bjarnason then added gloss to the scoreline as the hosts cut the gap to the leaders to just seven points with 10 games remaining.
Wolves' defeat allowed Cardiff to close in, Neil Warnock's men withstanding Birmingham City's second-half fightback to register a sixth successive win.
Nathaniel Mendez-Laing, Craig Bryson and Callum Paterson put Cardiff firmly in control at the interval.
The visitors, though, battled back in the second period, first pulling a goal back through Craig Gardner's penalty and then setting up a tense finale thanks to Maxime Colin's stoppage-time finish.
Cardiff held on, however, to strengthen its grip on an automatic promotion spot, while Birmingham remains in 22nd, two points adrift of safety.
Hull City fought back from 3-1 down to end Norwich City's seven-match unbeaten run in a remarkable game at KCOM Stadium that saw four penalties given.
Jackson Irvine handed the Tigers an early lead before James Maddison turned the game on its head with a quick-fire hat-trick, two of which were from the spot.
Abel Hernandez then brought the hosts level with two penalties of his own to give Harry Wilson a platform to net the winner 19 minutes from time.