I mean by design it is meant to be casual and more so party orientated with stage hazards and items. But clearly, it can also be a competitive fighting game. I don't understand why people think it can't be both of these things.
It's a matter of classification and identity. As you stated, it was by design, created to be a casual, party game. It's not created as a fighting game. Does it have some elements of fighting games? Perhaps, but it doesn't have its dna. NBA2k may have elements of RPG games, it's not an RPG tho. Same with this here. It's a arena brawler, not a fighting game.
I'm not saying it can't be competitive, as games by nature are competitive in some sense or another. It's just not a fighting game. And it's hilarious that players of the game want it so badly to be considered in the same leagues as such, to the point where they'll strip the game of its own identity to try to force it to be something it never was intended to be and most likely never will be. It has its own lane, no need to try to drive outta its jurisdiction. Why try to fit square peg into a round peg's slot? Smash is like that white lady that was on the news claiming to be black for years (or rather its stans are the ones that believe it as such). You can try to fake the funk, but the experience and background, nah...it just ain't it, bruh.