Have you ever been approached by your friend or someone you do not know trying to get close to you all of sudden showing a great interest in you, This could mean two things
They think you are attractive and they want to be in your company or they are probably trying to sell you a product. I know, I know, we have all been there. I have never been approached by such an aesthetically pleasing woman for my physical appearance YET. Anyway you have been approached by this individual and they want you to listen to them as they speak of this product.
Now depending on what the product is, you could or could not be interested but you might start getting yourself into it as it comes with a membership based plan that could generate a new stream of income.
Boom! You are in it now, you have purchased the product and now you have the responsibility of selling the product to someone else or else you will not be able to get your money back and will have to end up using the product on yourself (trust me, many of these products were as useless as a litter box designed for dogs).

Why do companies use such strategies? Do people really benefit from them or are the companies the only ones benefiting?
Firstly the companies use this strategies to save up their funding on marketing, they could be focused more on the production of the products rather than posting huge ads on billboards but failing to deliver the products on time. Companies that use this strategy are usually startups or companies that are crowdfunded (for people to people), They focus on building a great product without spending much on advertising, in most cases the prices of the products are way cheaper than their competition who focus more on spending their funds on huge banner ads.
Now people do benefit from promoting such firms as they are getting superior products for very cost effective rates (Look at OnePlus phones)
But in many cases multi level marketing does not focus on benefitting people and it is more about the company getting more sales, these companies like to use the term “Direct Sales”. They force users to take useless overpriced products and sell them to other users and get revenue by invitations and it could be super hard for many people as these products are low quality and they are poorly made as most of the funds generated are just to be revolving around the users who are in the chain.
So the idea is to look for products or services that are actually used and required by people with benefits that come along with multi level marketing, that is revenue generated by inviting people.
When it comes to having such services, one must see if they will have value even if they fail to invite others to the system and only then join it.

There are some non profit platforms such as Encrypted Dollar Coin that use Multi Level Marketing Strategy to reach out to as many people as possible helping people make money during their first phase, The company remains as non profit organisation during the phase until it ends and then Encrypted Dollar Coins start generating revenue from big companies by the help of the loyal user base who have already made their profits by joining ECD during phase 1.
The user is safe as he/she could withdraw his funds at anytime and liquidating his investment. Such business models help companies grow very fast as well as get a lot of support and gain a fan following as they emphasize on empowering the common man more than having control over them like most other organizations do.