The lab displays pooled data from eBay for the previous month, so results are based on monthly complied data. If competition is high, then it certainly indicates that it might be a hot market. The hottest selling items tend to have the most competition on eBay, and that means there will be some big time sellers to go up against more than likely.
Can you compete in that market? Well I would say probably not if you are dropshipping, because the chances are high that you will be going up against wholesale sellers working on very thin margins, at times even up against wholesalers or even manufacturers themselves. If you're buying in volume, then that's a market that might have some potential, because high competition usually means fast turnover hot selling items and if you can secure the right price, then you're in the right market.
Low success rate, not something to ignore completely. What the lab can't tell you is why the sell through rate is low, so that's identified a market that requires a closer look. Why is the rate low, are the prices too high, are the sellers providing a rubbish service, are the products just unpopular and so on.
If you can identify the issue, you might find opportunities to increase the sell through rate. Low sell through rates are usually where you find niche markets, products in these markets can at time make more margin because the sales are slower, but the competition is less because they're all off chasing the hot selling items.
So the lab is really just a tool to kick you off on the right research path.