As a Canadian, I don't see why it's so hard to understand Kobo's dominance in Canada. It's all about marketing, market presence and product visibility and access. A large part of it is Kobo's partnership with Chapters/Indigo, Canada's (only) major bookstore chain. If you read books in Canada, you know and likely go to Chapters/Indigo and associate buying books with Chapters/Indigo. So when people switch from books to ebooks, those same people associate ebooks with Kobo because that's what's available and marketed at Chapters/Indigo. Other ereaders are available but none of them are as accessible and straightforward to use in Canada as Kobo. It also helps a lot that the Kobo products are decent products - not perfect and maybe not even best in all categories but very competitive.
I just bought my first ereader this year and after looking into all the options I went with a Kobo Glo. And so far in ebook buying, I've done most of my buying from Kobo - they have almost everything I want to buy and, using the coupons available, I get very decent pricing, and no exchange rate fees.
So, in Canada, for most of the ereader/ebook buyers, Kobo just makes sense - and until some other company is willing to spend dollars in marketing and product accessibility, it's likely going to continue.