Programming has a fixed one-time cost to produce while subscription revenue scales with number of subscribers and is recurring. This means that as Netflix grows, they can keep producing more expensive content and grow their catalog faster. There is a feedback loop here:

The same money spent on content has higher ROI the bigger the subscriber count is -> the more/better content they produce, they more subscribers they can get -> the more subscribers, the more money they get to play with.

The mix of lower and higher-end content probably makes sense because the low end content is cheap to produce and caters to people with niche interests, or people who watch constantly and just want something new to watch.