Coinbase is popular because they make it easy. They make it feel like paypal. So to a new user who is maybe afraid of Bitcoin already, when they see something that's so easy to use.... They use it. They trust that it's secure and don't understand why no one wallet is secure enough to hold your whole balance.

I use Coinbase to buy and sell into USD. But I don't store my money there at all. It's just my middleman.