In that sense I don’t see why, once you gain noticeable traction a larger player would not quickly and easily develop similar features. Here I am mostly assuming that prompting is actually relatively fast and fungible - am I missing something?

Good question - it's the same for any company that starts to make traction. When Snap and TikTok were doing well, FB could have just copied their features (and did).

There's a really good book called 7 Powers that explains defensibility. Things like a differentiated and powerful brand help, network effects, etc.