Why there are many different kinds of plants and animals on earth?

Each new generation of any new species are the offspring of the successful survivors of the previous generation. For instance, the chemical that gives peppers their heat is capsaicin. Capsaicin has also been found to ward off fungus as well as mammalian predators. Thus, peppers found in fungal prone conditions (high humidity) are typically much hotter than those in drier climates. It is also interesting to note that Capsaicin does not affect sharks (thank you Myth-busters).

One might note that currently variations from generation to generation are so slow they are barely noticeable. That may be because of the size the population that are exposed to. The most exotic species are found in isolated ecosystems, such as islands or most recently in a dormant volcanic crater. When an ecosystem survives in relative isolation, the adaptations of species rapidly accelerates.