And as new nodes pour into the network, power laws take over, allowing those providing the greatest value to experience exponential rewards, with inactivity pushing competitors towards insignificance.
I have problem in this part pushing competitors towards insignificance it is ambiguous for me.
It's a little hard to tell exactly what's meant without the full context, but your assessment is basically correct. Inactivity means that the competitors are failing to do something (to provide value). This failure to act causes the competitors to become insignificant as they lose customers the businesses that do provide the greatest value. The competitors lose out on that income.
You description is of an interconnected network which is traversed.
There is some way of measuring value or usefulness at each node that is implied by activity (opposite of the reference to inactivity). Each node, when used (valued), receives a reward (possibly an increment in count) which increases exponentially (power laws). The value of a node may effect the number of times it is used, where higher value equals more usage (reenforcement), this in itself may cause the exponential increase in value.
