Bitcoin was designed to be a Peer-to-peer electronic cash system, and that is what it should be. I would note however that even if Bitcoin is used as a P2P electron cash system, it can also be used as a settlement layer, however there is little reason why anyone would want to do so.
That depends. There is a difference between what it can be and what it should be. As we can see there are limitations that currently would prevent a lot of people using Bitcoin everyday (even if we increased the block size limit tenfold).
It is almost as if the very idea of a settlement layer might even be antithetical to a world where cryptocurrency becomes the dominant form of currency, rendered obsolete like many of the other functions that banks carry out today.
Everyone keeps talking about it yet nobody mentions the differences between P2P Cash and a settlement layer.