The Mediterranean diet is practically based on it. It's the most significant difference in the southern Italian diet and the American one. People use what would seem to be horrifying amounts of oil to a typical American. They lead active lives into their 80s and 90s. The oil supports the consumption of more vegetables (by making them more palatable). The fact that the longest lived people in the world outside of Japan are consuming very large amounts of it (Spain, Italy, Sardinia, Greece, various Mediterranean islands) should suggest it's not a bad thing to consume. For reference, people in these countries are eating 250ml a week per person (15L a year in Greece). But this is only correlation.

I'm still fuzzy on lipids, but olive oil promotes HDL which removes cholesterol from bloodstream.

I have an unproven theory that a beach culture contributes as well. People want their bodies to look decent enough to show them off.