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https://en.wikipedia.org/wiki/Economies_of_scale

As Cloudflare gets bigger, they can provide services more cheaply. This is because (a) they can more fully utilise their data centres and other physical capital investments, (b) they can divide their fixed software costs over more users and (c) they get process efficiencies and discounts with scale.

A new entrant will struggle to match cost unless they're able to obtain similar scale. The bigger Cloudflare gets, the bigger the scale that a new entrant needs to hit before they can match them on cost.

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https://en.wikipedia.org/wiki/Network_effect

Second they're aiming to build a network effect through having huge number of locations. The more locations, the more appealing to new customers as they can be close to more users. A competitor will have to build a similar number of locations to match Cloudflare's proposition.

A new entrant cannot provide as much value, and therefore cannot charge as high a price, without building a similar sized network. This again requires the entrant to invest heavily before they can charge a similar price.

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The combination of these two things mean that when Cloudflare is operating at a large scale with a large network it can offer a more valuable service (and charge a higher price) than a new entrant, and earn more profit because it can operate at a lower cost.

Also, Cloudflare has the option of lowering its price and still being profitable due to lower costs at its scale, so it can deter entrants from trying to compete by the threat of being able to lower prices below what is profitable for new entrants.

The only players who can compete may be those who already have comparable size - Amazon, Google, Microsoft, Facebook, CDNs, etc, since they will already have addressed the issues of scale and network effects. However, they may not want to cannibalise their existing markets. It will be hard for other new entrants to compete.