PewDiePie, Smosh, Stampylonghead and many other creators use YT exclusively. By continuing to develop content networks and talent they seem to be competing quite admirably. I find the UX preferable to Twitch as well. And raw viewership numbers seem to be about 5-10x that of Twitch comparing the most popular channels side by side. Not to mention the extensive advertising partnerships YT already has.
It was used for the TI DOTA tournament to a lot of success. Many people using it claimed to prefer it over Twitch.
It's more responsive, the video quality is higher (1080p on Twitch looks bad, 1080p on YT Gaming looks good), and takes up less bandwidth (I don't have a citation or %'age of this, heard it from my coworker this morning as he had brought it up).
We also discussed YT allowing broader visibility, easier tie-ins to a YT channel (e.g. SivHD also monetizes his YT channel and it may be more beneficial to stream on YT Gaming than streaming on an entirely difference service over at Twitch).
Not sure how compelling the above is - but you asked for "why" so I did my best to answer with what I know.
E:
Forgot this one, and this one is kinda big for some people.
You're able to pause the video and resume playback from where you paused rather than being redirected to the live part of the livestream. You have to go back into the previous videos, load the videos, and miss out on the Twitch chat (some people/smaller stream communities care about that).
With Google I can pause the video, get the door for pizza, go back, and click "play". Can't do that on Twitch without missing gameplay, which for tournaments can be annoying.
There's also better notice for "streamer is now live" than on Twitch. Most people don't bother checking their email to see if a Twitch streamer is online. Many people are already browsing YT and can be notified. More notified users = more people watching your stream.