I wonder this every day myself. I don’t think this is a Freelancer question though, I think this is a buyer question. I once tried to get on board with the Amazon KDP bandwagon and in fairness, some of my early books need to be taken out to a firing range they’re so bad.
The thing is, you have some people who make a fortune on KDP by outsourcing writing to people who will work for these prices. What is more, every book they publish is complete and utter garbage. They’re so bad that even a fire would feel offended if you tried to burn them.
What I’ve come to realize, though, is that some people can project a brand identity and authoritativeness which their clients/buyers simply feel too embarrassed to question. In this case, they can pass off even the most insensible dribble as something like a literary masterpiece.
I see the same everywhere. A high flying SEO agency passes off the worst copy in the world as something worth hundreds. A supposedly top social media marketing company gets away with publishing unreadable tripe which simply doesn’t make sense.
Writing is an odd world which I will never fully understand. In fact, a lot of people who work for $1 per 500 words outsource content themselves. As for how end writers make enough to live, the only logical conclusion is that they are kept in cages somewhere and told that if they don’t get x amount of writing done in x amount of time, they’ll be fed to Danielle Steel.