I see people paying USD 10 for an item, and then paying USD 30 in fee for the BTC transaction, and I realize that this is not sustainable.
That might be exaggeration or that person make transaction during peak of Ordinal/BRC-20 hype which happened about a month ago. Currently you need about $1 to make your transaction confirmed on next block.
Why do people buy $10 stuff with Bitcoin?
Because they can or stuff they need to buy only costs $10.
For what stuff?
Could be anything. But i expect it would be digital goods such as VPN or gift card.
Or another unpopular but my favorite solution will be to increase block size but the problem is that majority of people somehow don't like this idea and say things like it will increase the blockchain size, will be more costly to run node and so on but that can't be and actually is not a problem today.
While i'm favor of block size increase (assuming it's not reckless or arbitrary increase), both of us know it won't happen anytime soon when LN and side-chain could be utilized first.