At least for me, part of the motivation with playing things is the idea that it is practice, and discipline, and improvement. Part of it is escapism, to be sure, but not all of it.
This is where each of us is unique mix - I couldn't care about improvement in things I do for fun. If it comes naturally, great, if it doesn't, same great. I know many people who aren't like that, especially competitive ones (which I consider a rather big disadvantage in life if one of your goals is to be a happy content person).
The only reasons I do it - to have fun and relax - is already there, it doesn't get better the better I get since there is not top level cap. One example - I do climbing, in & out. If I climb 4c (french grade, which is very beginner level), say after some accident or other longer time off, its the same type of challenge as climbing routes at 5c/6a level after some training period. It really doesn't change anything for me, the challenge, fear of fall/death, pushing through it and sense of accomplishment is the same.
Maybe not the best mental wiring to achieve most in life in measurable aspects like career or net worth, but sure as hell I can be happy with little. It is great. I wish more people were like this.
In my sport, I train and enjoy competing as hard as I can.
I find the highs I enjoy from winning over a player who is a similar or higher skill level than me outweighs the disappointment of losing to someone I shouldn't. And it seems the better I get, the less often I seem to lose to people that I shouldn't. I enjoy seeing that progress and enjoy competing against better players.
I've lost close matches and still enjoyed every second too.
I'd add to that. I think this doesn't just vary person to person, but also game to game, and even moment to moment. I'd compare it to food, in that it's not one size fits all, even for a given person and a given point in their life. Sometimes you want steak. Sometimes you want ice cream. You ought to eat some veggies. Sometimes you just need a damned cup of coffee.
