The thing about AirBnB is that these are not supposed to be permanent residences. Yes, $1,200/month can get you a private room in a house with other people but AirBnB is for travelers who are going to a new location they haven't been to before, or are just passing through.

It's very hard to find housing if you're going to be somewhere for just a few months, so AirBnB is there for those short stays and it's better and cheaper than a hotel, and a good way to meet people in the area.

You shouldn't really compare it with finding a place for good because that's not what it's for. I live in the area and have tried to find a short stay for a previous 3 month internship. It's very hard, and I had the luxury of being able to stay with my parents while I looked as I grew up within driving distance. However, I would imagine doing that from a distance would be next to impossible.