+169 on the "why" issue.
How is easy. Rock the wards, teach your students and interns well and do well on the ITE (no, it's not supposed to be used for this kind of thing, but the person who chooses the chiefs - the PD - is also the person who sees your ITE scores so it can't help to bomb the exam).
I'm not sure I will ever understand the "why" part though. I can only think of two good reasons to be a chief resident:
1. Your sole career goal is to be a PD.
2. You are promised (in writing) a cards or GI spot the following year if you take the beating that is the chief spot.
Other (bad) reasons people give for being a chief:
1. "I want to do academic general IM." Bogus...do a GIM fellowship. Sure, it's 2 years instead of 1, but you do less than 1/2 the work a chief does and get 40-60% of your time protected for "research" (read: skiing and going to the beach). You can also work the same number of hours as a Chief but by moonlighting and make nearly an attending's salary.
2. "Doing something for a year while I wait for my fellowship to start." Umm...I'm pretty sure that's why hospitalist jobs exist.
3. "Waiting for my spouse/partner to finish their residency/fellowship before moving." See #2.
4. "Not sure what I want to do after residency." I'm pretty sure "be everyone's biatch" isn't on the short list. Hello locums.
After all this, if you do wind up being a Chief resident, you need to know that there are really only 2 kinds...a-holes and tools. Be the former, or you risk being the latter which only makes the job that much harder.