It's convenient, and it has a decent theme by default. Plus I've met the guys and I like them. I'd say they are doing a good job at marketing themselves :)
Baffles me too. A self-hosted WordPress install is pure vanilla and offers plenty of tasty toppings a hacker can integrate via core APIs and theme hooks.
A self-hosted Wordpress also requires you to install the latest update every 2-3 weeks.