There is some competition between subreddits for attention, and a bad mod team can cause a subreddit to lose that competition (including to subreddits on different subjects), so there is some amount of successful community building that must have happened.
Certainly Reddit's setup does incentivize name squatting, but there's been plenty of cases where the obvious name is run by a team so ineffective that it gets outcompeted (r/marijuana vs r/trees, r/lgbt vs r/ainbow, r/moddedmc vs r/feedthebeast are some examples). And plenty of communities get by with non-obvious names, like r/DestinyTheGame, r/Pathfinder_RPG, so it's not purely a name race.