The hierarchy in this case was also about community. Being a Dom/Top in that culture meant having a responsibility in the community as the title was community-wide. While people had their own personal relationships that leaned Dom/Sub the hierarchy was useful for organizing and community protection. Generally, someone who "Earned the right to top" was also someone thoroughly vetted in the community; they were also someone that had contributed a lot to helping others and building up that sense of responsibility. This was really important since police and other violent and hostile groups would attempt to use covert operations to infiltrate the community to get mass arrests and shut down centers of the community (like bars, homes, &c). Generally, if you were allowed to be a top/dom in these spaces it also meant you were someone who people should listen to and take advice from in terms of survival as well. It also meant you were someone who would be able to give authoritative orders and direct people in an emergency, crisis, or protest situation.

This is also where earning your leather came from. People who were long in the community would gift an item of leather (usually a hat, coat, belt, boots, or gloves) to someone when they had reached a high level of community service and closeness to that person. It was an honor similar to becoming a "made man" in the mob. This was technically a criminal organization after all; Even if their only crime was existing as gay men. These leathers were also the common bond they all shared in that they were the ones issued to them by the Navy when they left the service. That connection mattered a LOT as it was a symbol of the last time they were all treated as fully human beings by society. It also meant that they weren't replaceable since they were only issued the one set after enlistment, so if someone gave you their leather it was something they could only do a few times in their life. This is also where the tradition among leather communities of passing down leather between generations comes from. They would be hidden from the person's family after they died and handed down to their partners and mentees as gifts to remember them by. Especially since they wouldn't be able to attend the "normal" funeral for their loved ones. This is also where bootblacking as a mode of service comes from, and why it was so important. The subs who did bootblack service in the community were critical to making sure the leathers survived long enough to be passed down through the generations.

So yeah; it may seem toxic to people outside the community now, but there are generations of queer sailors who were dumped off in the same way as before. It was around this time that anti-gay sentiment also ratcheted up in a massive way as a part of the red scare. This made it even more imperative to uphold traditions and keep the traditions in a way that would ensure that police and non-gay people would never let themselves get into a position of control over another person. If that happened then the community as a whole could be put in jeopardy because a hostile person could give orders or use the connections of subs (along with their loyalty and obedience) to get lists of members of the community who could then be arrested, outed, or killed. With the stakes that high doubling down on the "you need to serve the community as a sub/bottom for years" was a really good way of making sure outsiders would never reach that level of community access. Especially since that meant having gay sex and a LOT of obedience and submitting to S&M play.

So yeah; it may seem toxic to people outside the community now, but there's really good reasons why it existed that way; it was probably the only way what would become the Trans Community, the LGBTQ community, and the BDSM community had any chance of survival.

I should also note that the women who joined these communities had their own versions of these rituals and cultures and formed the "Dykes on Bikes" leather groups from the same time period.