They think they are giving away money for free. Printing money out-of-thin-air but they don't think of it that way.
Yes
They just see all those illiquid STEEM POWER valued in $$$$$$ (which is possible only because almost no one is cashing out and instead are powering up, except the probably the whales).
No, they don't really pay attention to the dollar value of Steem Power or think about cashing it out. Only crypto nerds think that way.
And they think maybe some of that karma will come back to them. They think everyone on Steem is so happy something better than their actual lives or other Internet sites.
Welcome to social media. Every single social media platform in existence consists in large part of people making their lives look better than they actually are, or occasionally posting drama for the voyeuristic enjoyment of others.