Witnesses are the governance of the Steem blockchain.
All decisions about the Steem blockchain, its mechanics, its future and for example how the rewards function are made by the Top 20 witnesses.
If tomorrow the SBD is truly pegged, that’s a decision only the witnesses can make.
If rewards are changed to 50% for creator and 50% for curators, that’s a decision only the witnesses can make.
The same applies to HardForks. The upcoming hardfork is not the decision of Steemit Inc, they prepared and released the code (in collaboration with witnesses, stakeholders, and community developers). But the acceptance of the HF is done by witnesses. If less than 2/3+1 witness deploy the HF on their server the HF is rejected. HardForks require super majority (2/3 + 1 vote).
The Steem community is a community owned and operated blockchain but the witnesses are its government.