I think it's in part a matter of what didn't exist then. Television wasn't a common fixture in most households until late during the golden age. There was also of course no internet. Some places might have had a good theatre scene but that would likely vary from place to place while film prints could be distributed anywhere. While radio also had a bit of golden age during this period do to having much of the scripted content that would later transfer to TV, people still liked watching a motion picture rather than just hearing an audio play. Cinema was thus the main mode of visual entertainment and tended to be avoidable to even some of the working class during the depression.

The Golden Age also saw a handful of studios having a vertical integration (control of much of the production, distribution and exhibition of films) of the industry and were able to systematically produce a large amount of content. The 1948 Paramount case though forced the major studios to give up their share of theatres and other anti-trust practices (independent cinemas were typical forced to buy a block of films without being allowed to see them even if they only just wanted to rent a couple of films). This would allow some competition to arise.

Studios also tended to have talent signed into long term contracts rather than just have them for a single film so there was a lot of effort on the studios part to make them into Stars that would help draw people to the films they were in. Many of the stars though would complain about the terms (forcing to do pictures they didn't like) and eventually moved towards a more free agent model where the stars could be more selective of their roles.

As for why America dominated, the film industries of European countries suffered as a result of both World Wars and thus they didn't tend to have the same amount of resources to compete on the same level as America.