What mistake did Itachi make?

His biggest mistake was not dealing with this guy properly. Itachi’s main drive throughout his life was always ensuring that his younger brother Sasuke was safe. In fact, Sasuke’s future was one of the primary reasons as to why he made the decision to assassinate the Uchiha Clan.

Is Itachi was sick?

Yes, Itachi did have a disease. Itachi’s sickness was not introduced until late into the story. It was implied during his fight with Sasuke that his issues were related to overuse of the Mangekyo Sharingan. However, the later clarification of his illness causing impending doom implies its unrelated to jutsu.

Why is Itachi bad?

Itachi Uchiha had always been a hero, but no one really knew about him and his past. It was only after Itachi’s death that his past was revealed by Obito. Itachi carried the burden of murdering his clan including his parents. He had to leave the village and then he joined Akatsuki.

What was holding Itachi back from becoming a better character?

The only real things holding him back were his dedication to both Sasuke and Konoha, forcing him into situations where he was used. No character put more weight on their shoulders than Itachi did, not even Naruto. He was so willing to protect Konoha that he did things no one his age should have had to.

Did Tobi know not to get on Itachi’s bad side?

Even villains as powerful as Tobi knew not to get on Itachi’s bad side. It’s somewhat obscene how often Itachi resorts to using Genjutsu to both subdue and push people forward. Sasuke’s the easiest to point to as he seemed to force him into remembering the day Itachi killed their parents every time they meet.

Did Danzo know not to mess with Itachi?

Even for a schemer like Danzo, he knew better than to mess with Itachi. Even villains as powerful as Tobi knew not to get on Itachi’s bad side. It’s somewhat obscene how often Itachi resorts to using Genjutsu to both subdue and push people forward.

Is Sasuke weaker than Itachi?

Yes, Sasuke wasn’t even on Itachi’s level during the fight you just watched. Yes, Sasuke was way weaker than he thought of himself, the fight vs Bee is the most important one for that argument, as Sasuke was literally put in his place by him.