Same reason Tsunade is on people's list. Hype. He's the head of the Hyuga clan. He's certainly not weak.
That's a big problem with Konoha, in terms of proven individuals. It's extremely top heavy with guys like Naruto(I understand he's not counted on this list, just saying in general), Kakashi and Gai, then you have a lot of hyped characters like Hiashi, Tsunade, Ino-Shika-Cho parents, etc that have been claimed to be great, but haven't shown much of anything to prove it, then past the hyped characters it's a really weak list sans Shikamaru, IMO.
Tsunade is not hype. With the skills that have been shown she is worthy of a place in top five.
-CR (regeneration of cells and organs almost instantly) and Slug Summoning alone gives her a slot
-Then comes unsurpassed medical ninjutsu
-Then comes her incredible taijutsu and raw strength (plus chakra enhancement)
-Then comes her intelligence (i.e. dealing with invasion of Pain)
-Then come her lesser jutsus like Body Pathway Derangement technique..which paralyzes you and makes you unable to move (manga)
lol she is not hype, she may have had one battle (where she was arrogant, foolish and had the blood-o-phobia) but still..
Tsunade would curb stomp Kakashi any day.
Kakashi's genjutsu is average (let's say a bit more than average) but due to Tsuande's incredible mastery and control of her chakra flow it's rendered useless, since one way to get out of genjutsu is to disrupt the chakra flow.
Kakashi's poor chakra levels and stamina allow him to use like ten of his 1000 known jutsus (which he haven't seen all so we'll go with the canon ones) and all of them are easily dodged or recoverable by Tsunade's CR. (i.e Fire Ball and Water Dragons)
The only chance Kakashi has at winning against Tsunade is if he Kamui's her head of or Raikiri's her brain. This is very difficult and highly unlikely since he has not done none in battle. Plus, Kamui drains chakra like hell and is very inaccurate (unless the target is standing completely still or moving in a straight pattern and Kakashi is both concentrated and standing still)
Tsunade has more chances of winning, stop comparing Kakashi and Tsunade. Tsunade is completely on a different level.
No, Kakashi cannot go all out and use two Kamui's and three Raikiri's plus other jutsus in a match because he'll die of exhaustion just like he did against Pain.