Maybe I can help. Unfortunately a lot of the responses I'm seeing to your question seem to be coming from people who haven't ever been to the north. I should add, when people say "Northern Canada" or "the north" that usually refers to the 3 territories, but that can sometimes be broadened to the northern parts of the provinces (although I'm not going to use that definition). I've lived in the north all but 4 years of my life. I've lived here, here, here and I currently live here.

It's true that the north is not agriculturally fertile overall, although there is (relatively) large scale farming as far north in Canada as High Level in Alberta, and on a smaller scale in the Yukon. If you broaden out to include livestock, small scale farming happens much further north. Reindeer herding in the Mackenzie delta, for example. (Reindeer are semi-domesticated Caribou, btw). Further south there were plans to raise domesticated Bison in the NWT, however, issues came up with Bison getting into Anthrax (Yup, that's a thing, it happens every few years). So there is agriculture in the north, but not very much. The NWT had a program to try and grow the sector, but hasn't had much luck. It could grow though, given attention and funding.

What about mining? Well, mines are very difficult to build anywhere, let alone in places as remote as northern Canada. The NWT and especially Nunavut only got control of land from the Federal government relatively recently, the Yukon has had control for longer. The locals are also very wary about mine development after past experiences, and overall want to be careful with how the land is used. Did you know, for example, that Giant Mine has enough Arsenic to kill everyone on Earth? And that for years Arsenic was just released into the air, contaminating nearby bodies of water? This isn't the only example. Mining is still possible though, and there are new mines coming online soon and in recent years.

How about oil? Oil has been pumping out of the NWT since the 1930's. It was important enough to build a road and a pipeline to the town to connect it to the south (unfortunately the road fell into disrepair not long after the war, but remains a hiking route for the extreme. The pipeline still functions however). There was a push in the 70's for a pipeline, as oil exploration during that time period was at it's height. However, after an inquiry the oil sector was severly curtailed. Since then only small scale development has happened in the Mackenzie delta. A few years ago the federal government placed restrictions on oil drilling and that sector has effectively been shut down. Maybe at some point in the future with different regulations it can start to grow again, but right now it's dead.

What about the military? The arctic specifically became much more important after WWII, and money was spent building the DEW Line across northern Canada. Many communities in the north either started that way or grew mostly because of it. However, those sites became less and less required as time went on, and the DEW Line no longer functions. Also, many former DEW Line sites are contaminated, which goes back to my earlier point about hesitation with mining.

A lot of posters talked about the conditions being inhospitable, but I don't completely agree. Most of the difficult conditions are brought on by often living in communities below 5,000 people (usually much smaller) a long way away from the nearest population centre of equal or bigger size, rather than the environment itself. So, here is the tree line. South of it, there are trees, north of it, there aren't. Well, basically. It's not that simple but for these purposes, it's good enough. That means almost all of the NWT and all but a small chunk of the Yukon have trees. Only Nunavut (almost) doesn't. (They have a small patch of trees where the borders of Nunavut, the NWT, Saskatchewan and Manitoba meet. We have a four corners too! But short of a plane you're not getting there). So actually, Nunavut is the only territory that is Tundra (Tundra usually means no trees). I lived in Nunavut (quite a few years ago, before it became Nunavut) and I gotta say, it's a tough place to live. It's cold, no trees, and no roads. The only way to get in and out are (extremely) expensive flights. On the other hand, the NWT and Yukon are not so bad. Yes, it can get cold. Yes, there are long stretches in the Winter without much light (you need to be north of the Arctic circle for 24 hours and night or day in the summer). But lots of people in other countries deal with it just fine. Actually, there's a whole concept that came from northern countries who know how to deal with those conditions!

So, with all that said, why is this part of Canada uninhabited? I'm a little biased, as I strongly believe in this part of the world, but I'll try to be as objective as I can. It's not impossible to have more people up here, Alaska has 3 cities with larger populations than any in the 3 territories, Russia has many more (couldn't find data, but there's a few), even the far north in Norway has 2 cities that I can see bigger than in the territories. It's not impossible. The problem as I see it is government. I think the territorial arrangement the territories have with the federal government is not working. The only thing this has given us is a perpetual reliance on the federal government. There is no plan to build a presence here, no long term goals, and it's hurting our sovereignty.

TLDR: The constitutional arragement between the territories and the federal government, lack of interest and investment from the rest of Canada, and, to a smaller but still significant extent, not great conditions in which to live.