What competitor SEO analysis is
Competitor SEO analysis means measuring the sites you compete with against the same criteria you measure yourself against, then using the differences to decide what to work on.
It is a comparison exercise, not an inspection. The output is not a list of everything wrong with your site.
It is a ranked account of where you sit behind, ahead, or level with the sites standing between you and the top of the results page.
That distinction matters because rankings are positional. No absolute score earns a top-three placement. A page ranks because it was judged a better answer than the alternatives available for that query.
Change the alternatives and the same page moves without a single edit. This is why an audit run in isolation can report a healthy site that keeps losing traffic. The site did not get worse. The field got better.
The short version
A solo audit tells you whether your site is good. A competitor comparison tells you whether it is good enough — which is the only question search actually asks.