A new Developer Blog for Overwatch 2 digs further into Blizzard's goals and plans for matchmaking in the competitive shooter. The update includes a Q&A answering your FAQing questions about the situation. It's lengthy enough that the TL/DR section could use its own condensed summary. No suck luck, so we'll have to deal with what we've got:

TL/DR

• Your ranked games are formed based on your internal matchmaking rating (MMR), regardless of your displayed skill tier. MMR changes based on the result of each match, with the amount of MMR you gain or lose depending on several factors like how highly rated your opponents were or how recently you last played.
• Our team is aware of some community pain points with competitive and matchmaking. We have a set of improvements coming to matchmaking, and we’re also working on updates to the competitive system.
• For competitive play in Season 3, we’ll reduce the number of wins between competitive updates from 7 to 5 wins or 20 to 15 losses. For our matchmaker, we’re implementing role delta changes that will match similarly ranked players within each role.
• Season 4 will include additional information about your current wins and losses on the competitive update screens. Our team has begun work on longer-term features and updates for both the matchmaker and competitive game mode, and we look forward to sharing more on those plans in the future!