Specifically, how is it that Hollywood became the center of film making and television as opposed to anywhere else in the world? It seems to me that the East Coast would have been a better area for American film due to having a larger population and therefore easier access to to a deep potential talent pool (since LA didn't have a population of over a million until after 1925 according to this graph). It seems odd that a city on the other side of the country from, well, everything, would become America's source of big entertainment.
As a follow up, why didn't the film studios in Europe or Asia get as big internationally as Hollywood films? I assume it has something to do with the way the studios were run since many films were shot on location in other countries, but by and large it seems that many of what we call "the classics" still came out of a studio based in Hollywood.
EDIT: Thanks for the replies everyone!
As a follow up, why didn't the film studios in Europe or Asia get as big internationally as Hollywood films?
I can answer that part of your question. Prior to WWI one of the biggest movie producers in Europe was actually Nordisk Films Kompagni ("Nordic Movie Company") in Denmark founded by Ole Olsen in 1906. They had enormous popularity in all of Europe and their movies also had a fair share of the American market. In 1908 alone they produced more than 100 movies.
But by the breakout of World War I distribution channels were disrupted, and even though Germany remained a market for Danish movies, it still wasn't enough to keep up the funding for the high quantity of movies that had previously gone on. Instead the Danish movie industry focused on fewer movies with higher quality production.
The US however did not suffer as much from the distribution problems with Europe as it had a big internal market, and this helped greatly in the US movie industry overtaking the European one in terms of funding and production during the war years.
When World War I ended and distribution could be resumed, the US movie industry already had gained a good share of the European market, and this share would only grow the following decades (of course interrupted by World War II, but the interest for new US movies had only grown during the war, so it was easy for Hollywood to reenter the European market in the post war years).