I admit, I watch this show even though I know it's fake. Why? For the same reason I watch police shows where people get murdered...I know it's fake...nobody is actually murdered on the show. It's entertainment.
Who appears on Master Chef? Most contestants send a video, then go and prepare a signature dish in person at various tryouts around the country. Their dish is graded by subcontracted cooking school judges in secret.
If they pass the test there comes reams of paperwork. A few get selected, not because of their cooking skills, but because they are weird or they will make for entertaining viewing.
Those selected fly to Los Angeles at their own expense, meet at a hotel and take a psychological test. After the test a computer analyzes the results and the contestants then meet with a psychiatrist, or at least someone who looks like a psychiatrist.
If a person gets selected they have to sign a contract saying they understand they may be subjected to physical and mental distress, agree to have their medical history used in any way and such information can be used in perpetuity. Contestants are also informed that their family would likely not be contacted in the case of an emergency. They also agree to release the show from liability for any injuries and social and economic losses that could result, some of which could be substantial.
Getting to the actual show, it's fake and is designed to make for entertaining television. Good chefs can get eliminated immediately after making one small mistake if they aren't entertaining. Meanwhile bad chefs remain if they are interesting characters.
The gender of the contestants is important, too; they try to keep the number of men and women balanced. Again, it can result in good chefs getting eliminated while keeping bad ones. Not that it really matters because few contestants go on to fame and fortune; most return to their regular jobs.
When the judges taste the dishes during the televised judging, the dishes are cold. They actual judging is done off camera when the food is hot. The judges actually taste food at each of the contestants' stations while the contestants are cooking. The left over food at the end of the show is eaten by the crew.
Winners, and the money that goes with it, are sometimes chosen by the judges based on sympathy for the contestants real world plight, not because they prepared the best dishes or were the best cooks.
For further reading see I am a "MasterChef" survivor