As others have noted, the Content ID system is in place to show that YouTube is proactively trying to do something about piracy - this makes the movie studios and record labels less likely to sue Google.
> Also I don't understand why competitors are not really picking up.
Video hosting and streaming on the scale of YouTube is expensive and probably can't be profitable.
YouTube allows anyone to upload an unlimited amount of 4K video, make it available to everyone in the world - all free of charge. Advertising revenue won't cover everything, and of course, quite a few people are blocking ads.
Services like Vimeo compete to some extent, but they acknowledge the expenses involved, so only cater for niche market segments. Things like PeerTube offer an alternative model, using peer to peer bandwidth to keep the costs down - but the federated nature of it makes it less likely to catch on in the mainstream like YouTube has.