On the positive side, the emergence of alternative cryptocurrencies helped to increase overall public interest in the concept of cryptocurrency and blockchain technology.
Not that much though, specially these days. In early days there were serious developers who were focusing on exploring the alternative solutions and did actual development and innovation. That is long dead now and all we see are devs who are interested in making the easiest thing like a token in order to make the most amount of money in the shortest amount of time.
In other words at this point altcoins are only increasing the interest in making more [fiat] profit.
By offering alternative options to Bitcoin, altcoins helped to broaden the appeal of the cryptocurrency space and attract new users who may not have been interested in Bitcoin specifically.
I disagree.
People who don't know bitcoin or aren't interested in bitcoin are also not interested in altcoins. In fact almost everyone who has ever touched altcoins were into bitcoin first.
At the same time, the emergence of altcoins also created competition for Bitcoin,
Not at all because of the reasons I explained at the start.
In some cases, alternative cryptocurrencies may have drawn investment and attention away from Bitcoin,
Wrong. It is pretty easy to verify too, look at what happens to altcoins each time bitcoin price moves: They get dumped. This shows that people didn't really "diversify" their investment, they just took their money into another highly risky market to increase it and come back to bitcoin.
This could potentially undermine overall confidence in the cryptocurrency market, including Bitcoin.
This I agree with specially since there has been propaganda campaigns against bitcoin where they point out all the scams in the altcoin scene while the main subject is bitcoin. To an unaware person who doesn't know bitcoin they all look alike.