Is there some other quality I am missing that separates it from any other piece of property someone owns, creates a website for, and calls a micronation?
The most interesting part is the legal wrangling.
It's not private property - it was built with driftwood in a public nature preserve. The authorities wanted it gone, but first of all - it's natural driftwood - is that illegal? Well, it turned out to be. So the artist sold the sculpture itself to some uncontactable people outside of the country, and suddenly the municipality couldn't just order him to remove it, and so on and so forth. He then built another sculpture of cement with hundreds of numbered rocks, and sold each rock to a different person, in order to spread the "blame" further.
Eventually it got so popular it became a local tourist attraction. And so it still stands.
edit: Aside from that it's just a kooky artist doing kooky things. Lars Vilks in infamous in Sweden for his stunts. He's also been outspoken in free speech issues which has made him a target of Muslim fundamentalists.
The artist in question has also had lots of media attention for his work depicting Muhammed (the prophet): https://en.wikipedia.org/wiki/Lars_Vilks#Muhammad_drawings_c... The guy is a racist nutjob.
My impression is that he mainly trolls the art establishment. It's usually quite difficult to tell how serious he is. His book "Hur man blir samtidskonstnär på tre dagar: handbok med teori" ["How to become a contemporary artist in three days"] seems to seriously and carefully argue for George Dickie's institutional theory of art, while at the same time it is clearly taking the piss out of contemporary art projects...
The artists are simply fucking around.