HAHAHA Really enjoyed reading this one. I could picture the conversation happening in the my head. Sounds like a conversation I would have with some of my friends.
I explain it to them in a way they would understand and keep it simple. Just like you, I just tell them that it's like Facebook, YouTube, and a Blog site where "Likes" actually earn you Steem which is like Bitcoin in a sense that it's a digital currency. The Steem can be converted to regular money, but there's a process.
RE: How do you explain Steemit to someone?