I think their real edge is a practically free and practically infinite bandwidth/capacity global CDN setup. There's no real technical reason for this still to be the case, but bandwidth costs are significant for people relying on other services to provide such. Or they're cheap and slow/capped.

This is the main reason I think alternative sites have a hard time competing. Play anything on YouTube from anywhere and if it's buffering/slow then it's probably your internet connection that's the problem. By contrast do the same on competing streaming sites and it's, more or less, expected especially if you aren't in certain geographic areas.

Monetization on YouTube is mostly just a carrot on a stick. The overwhelming majority of content creators will never make anything more than pocket change off of it. That carrot might still work as an incentivization system, but I don't think it's necessarily the driving force.