I don't really watch anymore I will occasionally turn and watch a few minutes of wrestling now a days. I was a big fan back in the day when I was younger during the Hulk Hogan days and watched during the Rock and Stone Cold days. I will say I am embarrassed to say I watch it at times.
the "fake" element of wrestling allows for larger then life personalities. And control over certain elements that might taint that personality through legitment wins and losses.
Think about it this way imagine if Floyd Maywether was as cocky as he is now but lacked the talent (i.e getting knocked out consistently). He would lose what many fans love/hate about him and be a mere laughing stock to the sport and fans. Wrestling would find ways to "protect" Floyd's character and find ways to minimize the hit his credibility would take from a single or multiple losses (i.e. having people interfere in his matches to help him win). The keep that element that makes fan love or hate him.
The Rock became popular because of his funny catchphrases and humor. The WWE was able to create and harvest a crossover star by allowing the Rock to be one of there "best wrestlers" or main star. If this happened to be a legit wrestling or MMA style fighting and the Rock couldn't handle himself in the ring he wouldn't be where he is today. I wish I could convey it better then I have. That's the best I can do.
Response to the bolded....
The blood is real it's called blading which the WWE doesn't do anymore.
Blading (professional wrestling) - Wikipedia, the free encyclopedia
Chair-shots.. I can't find the article but the chairs are real also. it's something about the way the hit others with it the minimizes the impact.
It's fake but the injuries can be real. And it happens a lot.
Real Injuries...
Vader vs 2 guys - YouTube 1:56
https://www.youtube.com/watch?v=oKEENCpRdIY
Wade Barrett Injury On WWE Raw 2/20/12 - YouTube 0:36 Dislocates elbow
https://www.youtube.com/watch?v=RVVy54LSMQ0 0:13 neck and head injury