I see what you're saying and to me seems the most relevant aspect of the transition. This has happened before, vehicles go faster than people or horses and machines play chess better than any human, but we still have foot-races and chess is as popular as ever. People will always do things and compete and play, it will just not be for work and to pay for things we need. The road there may be very bumpy, but once there we will have a new currency for recognition and appreciation.

When it comes to art, machines won't replace humans because communicating the human condition is at the core of art. Some things categorized as art e.g. blockbuster movies may entirely be machine made and enjoyed for its novelty and spectacle and that's fine too.