>>59295252Watching people play games online goes all the way back to the early 2000s let's plays/after-action-reports that were forum or blog posts where people would turn their play experience into a narrative. This was even before video, sometimes with screenshots or art illustrations. Grand strategy games and Dwarf Fortress were particularly known for these.
Even without the online aspect, sometimes people who don't have the skill to play the challenging parts simply enjoy watching the story play out in an RPG while someone else plays it in the same room.
Specifically for vtubers, the entertainment comes from how much they react to the action on screen. That's why horror games and malding games are some of the most popular, because they're more likely to incite a strong emotional reaction of terror in the former and anger in the latter. If the streamer just passively plays through a long game in silence then you might as well watch a walkthrough video on 2x speed. They have to spice it up with things like voicing the dialogue or chatting about random ideas prompted from game content or doing goofy but suboptimal plays. The latter however can backfire if the audience is very autistic and gets frustrated when the player doesn't do the "right" thing.