According to a previous post, they do not see the hobby as big enough for a true rivalry.
Since D&D 5E tables tend to outnumber Pathfinder tables locally at a rate between 2-1 to 5-1 depending on the store I'm wondering where they get that data from. Maybe way more people are buying Pathfinder books for home games and D&D 5E players are only buying the books to play D&D Encounters?
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Network effect. Draw in competitors customers and make them your own as well. Lots of people buy more than one type of game.
There is also the fact that many of the people who write for Paizo also write for D&D. The game design community is a family, regardless of which company they sit under. And family wants each other to succeed.
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why would you host dnds, a huge competetor, stuff on your site.
PFRPG and 5e aren't in direct competition. It's more of a friendly rivalry, if that. Most Paizo personnel consider themselves friends and colleagues of WotC personnel. And most third-party publishers make materials for both systems (and often more).
Additionally, most tabletop RPGers play multiple game systems. I, for one, play both Pathfinder and 5E...and Dungeon World, and Fate, and Swords & Wizardry, and Call of Cthulhu, and Fiasco, and Blue Rose, and Lords of Gossamer and Shadow, and Night Witches, and GURPS...
And it's not that tough to convert adventures between PFRPG and 5E. I am running a PFRPG conversion of Curse of Strahd right now, in fact.
From a business side: Selling 5E materials on their site lets Paizo get a financial cut of 5E's popularity.
For such a niche industry as tabletop RPGs, the recent rise in popularity for any single game is good for the industry as a whole!
I know my group has switched to 5E, but I really like the PF community, so it's nice to get both at the same place.