There isn't much to be added to EKG on the subject. The fact that most managements would be happy to abolish seniority overnight should be warning enough that this is a system that benefits pilots.
Of course I can't sensibly jump ship (except to an upstart carrier) once I have ascended the ladder far enough to make the jump to the bottom of the list painful. But why should someone jumping ship be allowed to jump ahead of someone already employed at the other airline. If the other airline lacks sufficiently experienced copilots direct entry captains are allowed by many seniority systems. If sufficient copilots are available for upgrading, they should be given the chance.
Why should we blindly accept the dictum that "labor is mobile these days"? Being "stuck on top of the list" is also an incentive to keep ones place of work alive.
The only alternative to this would be a "global list" system, i.e. all pilots in a country (or even in Europe) being on one seniority list. They would thus form a kind of "guild" and all airlines would hire pilots from the guild. As this would require all pilots to stick together and NOT hire themselves without consent of the guild, and as the age where guilds were thought to be required by the will of god is long gone, such a scenario seems pretty unlikely, although a monopoly on the supply of trained pilots would allow for good contracts.....need to get some oxygen now before this gets out of hand.....
I have experienced how pilots (with seniority) and cabin attendants and other stuff (without seniority) are promoted at my company. These experiences leave me absolutely convinced of the merits of seniority.
As for rosters and vacation, it depends on the structure of the group. If the airline is of fairly constant size with people being hired on a regular basis, seniority is quite OK as everyone moves up the list.
If the airline is expanding rapidly you typically have lots of people hired over a short period who joined (almost) together and will retire (almost) together. As the "younger" ones will remain "younger" by a few weeks or months over their whole career seniority doesn't give them a lot of prospects. Rotating systems might be better here.