I am completely and totally flabbergasted by their popularity. It's as though millions of people were turning their noses up at fine, free homemade French food and paying for McDonald's instead.
The same as wifi, right? Strictly worse in every way. Except for the not needing wires way.
Wifi: The internet comes from one (inconvenient) place in the home that I can't choose. I've got a couple of powerline ethernet adapters, but I've also got a lot of devices that handle wifi, but not ethernet. The choice is between using wifi or skipping the network connection. It's great as a last- (or only)-resort connection option, and it's usually sufficient, but then my uses for it are usually pretty tame anyhow.
Bluetooth was originally encrypted, but gained the option of non-encrypted channels with version 1.1.
On top of that Bluetooth use frequency hopping.
Until recently there was no real hardware for scanning/sniffing Bluetooth traffic, at least not anything easily available compared to a wifi card in promiscuous mode.