Well there's no compulsion for anyone to enter, nor to attend. I have entered a few myself in my time, and as Tom says, it gives you something to focus on, without which song might not get written at all. What is disappointing in some competitions is not to do with winning or not, but not getting some critique and feedback from the judges, however brief, (even if you don't agree with them!): much better than only knowing you didn't make 1st, 2nd or 3rd place!
I used to belong to a songwriting group and found the monthly task of coming up with a song on a set subject was a challenge, even a chore, especially if I had no real interest in the set topic. Most of my songs have been sparked by little things that happen in life, so there could be long droughts followed by 2 or 3 songs in a week, just depending what fires my imagination.
Some of the same criticisms of competitions have been levelled at people setting up or taking part in instrumental playing or tune-writing contests. Again, I'd say, no-one has to do it (except maybe very young people being pushed by over-zealous parents or teachers!)