Yes, but Paizo didn't originally create the OGL. WotC seems to have been the first to openly license RPG content (I don't think any notable publisher used a creative commons license before them, someone correct me if I am wrong).
While you can use the qualifier 'notable' to exclude either or both of these if you like, FUDGE, which later led to FATE, was wide open from the beginning (1992), and Hero launched Fuzion, an open-source version of their system nominally combined with R.Talsorian's Interlock, in 1998.
D&D hasn't really innovated since 1974. But, it's kiinda *the* innovation of all RPG innovations, so it's not like it'll ever be out-innovated.
Paizo took the top spot while 4e was still a thing, well before the hiatus started
Not exactly. Piazo took the top spot in one quarter - the one quarter when D&D changed directions from 4e to Essentials. And it was another 3 before it consistently started doing so. By then, D&D had gone from 20+ releases a year down to 4, shortly thereafter, it went out of print.
4e - with the fanatical campaign of vitriol, lies, hatred and misinformation that was the edition war in full swing - beat out Pathfinder's big release and core books. Y'know, the core books that always sell best according to common industry wisdom.
Now, D&D's core books have it back on top. D&D fans, though, have a record of buying up the core quickly, and ignoring a lot of what follows, though, while Piazo's fans are a lot more consistent in their loyalty. Pathfinder could easily re-claim the top spot in in-store sales if it keeps up its rapid pace, its fans remain staunch in their commitment to buy absolutely everything released, and 5e just puts out two books a year.
I then remember the subtle change in language in the industry when people begin talking about the industry leader and it was clear who people were looking to for leadership. (hint: it was not WotC).
I remember that, too. It was the late 90s, and people thought WWGS was leading the industry in the vacuum left by TSR. Then WotC bought out TSR, and, in 2000, boom, 3.0, d20 OGL, and D&D was right back on top again.
But for RPGs divisions alone, Paizo beats out just about everyone else right now for company size, including WotC.
I don't doubt it. WotC's model right now is to produce & sell a few titles to a large number of D&D fans, and it's giving them the top spot. Paizo's is to produce and sell a large number of of titles, which requires more developers, and means lower margins, and that's giving them the #2 spot. The conclusion is clear: WotC may have more fans, but Paizo fans have greater brand loyalty, they eagerly buy each new release. (Unless they get to game 30 hours a week, I don't see how they can blow through that much material, that fast. Must be nice.)
Ultimately, though, even if Paizo permanently takes the Icv2 in-store sales lead in the $15million TTRPG market, it's still doing it with a version of D&D, just one that can't technically have D&D on the cover. Really, when thinking about which game is the biggest in the TTRPG hobby, D&D (all eds), Pathfinder, and OSR games should all be added together. They're all D&D in some very real sense - certainly they all are to the indifferent perceptions of the mainstream, for whom /all/ RPGs are D&D.