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Why, contrary to theoretical predictions, do marine microbe communities harbor tremendous phenotypic heterogeneity? How can so many marine microbe species competing in the same niche coexist? We discovered a unifying explanation for both phenomena by investigating a non-cooperative game that interpolates between individual-level competitions and species-level outcomes. We identified all equilibrium strategies of the game. These strategies represent the probability distribution of competitive abilities (e.g. traits) and are characterized by maximal phenotypic heterogeneity. They are also neutral towards each other in the sense that an unlimited number of species can co-exist while competing according to the equilibrium strategies. Whereas prior theory predicts that natural selection would minimize trait variation around an optimum value, here we obtained a mathematical proof that species with maximally variable traits are those that endure. This discrepancy may reflect a disparity between predictions from models developed for larger organisms in contrast to our microbe-centric model. Rigorous mathematics proves that phenotypic heterogeneity is itself a mechanistic underpinning of microbial diversity. This discovery has fundamental ramifications for microbial ecology and may represent an adaptive reservoir sheltering biodiversity in changing environmental conditions.