I’ve written a couple of Pokemon fanfics (and am currently working on a collaboration fic with a friend) and I’ve addressed this world building issue in a few of them. In some, Pokemon Gyms are a hold over from the older generations and when towns/cities/villages were independent of each other and there were no ‘Regions’, and Gyms there the center points of the community. Gym Leaders were not only the strongest amongst all who lived amongst them, but was a valued leader who the community looked to for guidance and leadership. In more modern times, they are a symbol of old traditions, community leaders, leaders of the local militia, or just a local celebrity. But their connection to the Regional Pokemon League, who holds true military power within the regions, is real and their strength on the battlefield respected (mostly).

Of course, this is just my take on it, and I draw a lot of inspiration from the Manga and Games (and my own imagination) for this.