How: Primarily through product advertisements on their accounts.

Why:On the order of a few thousand a year for a big account, why is that surprising? It's not a career, even for most of the people making money off of the platform. It's more on the order of youtube videos. Yeah, a few people might make a living from it, but that's a vanishingly small percentage of the people pulling in some sort of income from it.

(Is this a serious question?)

IG influencers might be most cost-effective way of getting your product in front of potential customers.

Example: If you sell novelty beer mats and there's someone on IG with 500,000 followers who posts images of novelty beer mats, you might consider paying them a decent chunk of cash to talk about your business.

Yes, and so are "rockstars". The thing is that not everyone who plays a guitar is a rockstar and not everyone who posts on instagram is an influencer. For the large majority there is no money to be had, but for few lucky individuals you can make a decent bug doing it. Though if you are planning on switching carriers I'd bet on rockstar over Instagram influencer.

Brands pay them to review / promote products with varying levels of control and payment depending on how influential the influencer is. If you have over 10,000 followers and are active people just send you hundreds of dollars of free product with no strings attached. They also give free stuff (and pay if you're important) in exchange for some specific amount of content, two instagram posts over X days and 1 blog post.

They also hire an influencer to run a promo or booth as a brand ambassador.

The why is obvious: it makes them more money than they pay.

Through advertising. It's a very very very small percentage of people.