I used to play basketball as I'm sure many people reading this have. I can not recall a time playing against a team that was light years ahead of us in a competitive match. The Chicago Bulls are not going to be pit against a bunch of school kids for example. Noobs do get crushed, but his point still stands.
The same is not true in video games. The only way you can pit players of equal skill against each other is by watching them. The game itself can't really do that. That's why you run into so many n00bs getting totally destroyed and discouraged.
I disagree that if all skill levels are winning you don't have a competitive game. I think that's actually backwards. You don't have a competitive game if one player is totally destroying the opponent to the point where there IS no competition. Which is the thing people in this thread have been trying to say but only slammed for sucking at the game. A spectrum of worst-best is great, just make sure everyone is playing people within their rank.
Again, I'm just a bastard trying to stir up trouble =P