The whole thing is dumb

It's actually pretty sensible. The guide was created in 1900 to help people find Michelin tires when traveling, at a time where finding a garage or a gas station was a major issue for drivers. Then they added other stuff like hotel and restaurant recommandations. It came free with Michelin tires so it quickly became popular.

As for french culinary traditions, you may not know the dishes but it's actually the basis for most of western cuisine... Every chef worth its salt has studied it, and French people take food pretty seriously. So it makes sense that the leading restaurant guide is French.

So if you start an absolute kickass restaurant in a place that happens to allow Michelin stars but already has a few restaurants that have stars, well too bad, there aren't any stars left.

Every years some restaurants are demoted or even removed from the guide, precisely to make place for new, better ones. The Michelin guide is not trip advisor, it's meant to provide a small selection of outstanding restaurants.