Why do we spar? Training, recreation, competition? All three to varying degrees.
Is competitive sparring Tae Kwon Do? Not any more than knot-tying races are sailing. They are games developed from training exercises which have then been standardized to permit competition.
Look, say, for instance, that I'm an avid hunter (well, the "hunter" part is accurate; I'm just not as avid as I would like to be). A major aspect of training is, of course, target practice. Such practice is not itself hunting, but rather, just an exercise to develop and evaluate proficiency for a particular subset of the skills used in hunting. Occasionally, I might target shoot in competition with others recreationally. Or, if I really wanted to, I could try to become ranked for sanctioned competitions. Those competitions could become an all-consuming activity. But no matter how good I get at it and no matter how many hunters participate, target shooting is still not hunting.
There are zillions of hunting organizations in the US. A great number of them hold tournaments, many of which may follow standardized rules and regulations put forth by some other body (such as the NRA). But only a minority of those tournaments are NRA-sanctioned for the purpose of nationally ranking competitors.
Same is true with WTF. It's a arm of the KKW created specifically and exclusively for the regulation (and promotion) of Tae Kwon Do sparring as competitive sport. It focuses only on a subset of the skills related to TKD. Meanwhile, other regulatory organizations that standardize rules for TKD sparring competitions choose to focus on a different subset of skills. But, no matter how the game is played, it is still not, in and of itself, TKD.
Does TKD training necessarily need to include sparring as part of the curriculum? Well, I suppose not...provided that one incorporates other exercises to develop that subset of essential skills. But I think that sparring has been shown to be a pretty effective (and certainly popular) one.
Is competitive sparring [by "competitive", I particularly mean participating in tournaments, as opposed to just sparring within one's own school--because, afterall, any sparring, whether for training or just recreation, is inherently competitive on some level] an essential component of TKD training? Not from what I've seen. But, even if inessential, tournaments are a big part of TKD culture. (I just consider it unfortunate when they overshadow the rest of the training. But, to each one's own.)
And does competitive sparring require WTF? Heck no. But someone has to set standards. If you don't like WTF's, then use someone else's. Realize, though, that if you're seeking state, national, or international ranking, your choices will be pretty limited. But, then, if you dislike a particular format, why would you want to be ranked in it anyway?