It has to be exciting, but people demand safety. Cars have to be advanced, but differences between them small enough for there to be actual competition. We have lots of technology, but what we like to see is driver skill and not how fast a computer can hurl 600+ kilograms of mass around a track.
As these considerations play out you end up with Formula One. Which is compromise upon compromise. While maintaining some sort of illusion of F1 being the ultimate expression of technology and skill for the uneducated and the ignorant masses.
Don't get me wrong. The drivers and the teams are pretty much the ultimate performers in their respective disciplines. All of the drivers are top athletes that can take a lot more punishment while maintaining higher levels of concentration over longer periods of time than the vast majority of olympians. But they are still part of something that needs to work as a show.
And it just won't pull in any money if you have one or two teams dominating the field completely for year after year.
As any big sport, F1 is closer to pro wrestling than it is to the pure sport we would like to tell ourselves that it is.