Because their business model is your little sister listening at the door, then running to tell everyone your news before anyone else can, so she can have the social capital gain of being first in the know.

You can't be the first to react to price changes unless you can hear about them sooner, process them faster, and issue responses sooner than everyone else. If your business model is "buying just before everyone else buys and drives the price up" and "selling just before everyone else sells and drives the price down", you need to turn yourself into a paperclip maximiser using ever more resources to try to out-compete the other companies doing the same.

Order priority. Some exchanges pro-rata trade matching (i.e. you'll get a percentage of your order filled), others just use a FIFO queue. So if the price changes to something that want to buy/sell at, and you get in first, you get matched, your order is filled, you win.

Speed of light is 1ft per nanosecond. So 1000 ft of network cable between you and the exchange server, is 1 microsecond of latency, just on the wire.

Hence straight-line microwave towers, or co-located servers "in the same cabinet".

Then you have the latency from the wire to machine memory, so there's a whole industry of Solarflare-esque network cards that work entirely in userland to further reduce latency.

High Frequency Traders are in a race with each other to react to news. The competition does sub 1ms so if you want to be competitive you need to be sub 1ms as well.

Yes. This sort for "trading" is a game and the second finisher is the first loser.

Thankfully there are more honorable examples for low-latency systems, like medicine, games, planes, rockets, communication systems :)

More like sub-1 usec for high speed trading.

Yes. In front-running or market making your algo is either the fastest to act or might as well not even try because it would incur a net-loss.