A list of usernames and passwords it's useful if you use a program to manage them - automatically. Spam detection is super good nowadays, so it's super hard to create many accounts and keep them alive. Actually, keeping them alive it's the harder segment of it.
Fake followers = fake accounts. They're worthless. But some people don't care and just like to inflate their followers number because people think its cool to have many followers. Aslong as they can't tell they're fake tho.
Real followers = real persons following you because they like you. They're valuable. Why? Like any other advertising model where you're the publisher, you get paid per impression/post/sale/click/whatever. E.g you can share a photo where you're holding a certain brand of whisky and you get paid by said brand (to get brand to pay you, they either contact you directly or you partner with some agency) or you can promote your own company as well obviously. . You can also share a link in the bio.
Pardon my ignorance but I thought the more followers and engagement you have on Instagram the more you can charge for a sponsored post or product placement?
Example: https://www.theguardian.com/technology/2012/aug/26/how-many-...
It's common to see fitness coaches and C-List celebrities to have lots of followers but very few likes/comments, which is a common sign of the user buying followers.