A large number of companies are operating. Because there is a lower level of barriers to entry and exit from the market.
Since there is a large number of companies are operating, each company has a small market share. So no company has a monopoly power to control the market price and output.
But each company works independently and does not much consider the actions of the other companies. In other words, there is no perfect competition and there is imperfect competition.
Because companies in the monopolistic competitive market produce differentiated products which have differences but substitutes for the others products.
Companies compete not only based on the price, but also they compete based on the quality of the products, market strategies that they use, and so on. So, companies in monopolistic competition must invest in product development to increase the quality of the products and advertising to increase customer awareness.