They introduced Shorts because TikTok threatens their monopoly. TikTok raised max length some time ago so they do it too. Now US is going to ban TT and they’re trying to clone some easy to implement stuff in hopes of getting users that won’t move to Instagram. Don’t see that happening because Google doesn't understand what makes TT so popular. It’s kind of funny that TT recently implemented horizontal videos and it’s as half-assed as Google attempt at vertical ones.
Not really. I've seen plenty of sponsored YT Shorts, properly tagged and everything so YT's definitely got the infrastructure in place to monetize Shorts. But most sponsors aren't going to pay for a Short because... well, it's too short, so those tend to be few and far between.
However, Shorts aren't profitable for their ability to directly monetize your content, they're profitable for their ability to drive a LOT of new viewers to your longer-form content. The Shorts algorithm is very aggressive at referring you to channels you aren't subscribed to, and that has helped a lot of creators get very large followings, very quickly.
Thor/Pirate Software is an excellent example of this; he's always had a pretty decent following, but once he started putting out YT Shorts, his subscriber and view counts began skyrocketing, which has also overflown into new Twitch subscribers, as well. He started with a small but healthy community, and has blown up into a huge, multi-platform community, and has easily doubled his YT earnings since engaging with Shorts.
Shorts are very helpful to creators right now. More creators need to realize that creating YT Shorts is basically creating ads for your own YT channel, on YT, for free. It's probably the closest thing to "IRL money dupe glitch" that there is.