E.g a simple interest rate swap: I agree to pay you 2% per annum on a reference notional of 100m for 10 years, and in exchange you pay me libor referencing the same notional. At the end of first year let's say libor fixes at 1.98%. Hence I pay you a net 0.02% (2% - 1.98%) of 100m, i.e 20,000. We do this every year for 10 years.
It is just a way to hedge interest rate exposure - e.g I have borrowed 100m paying a Libor-linked interest rate and don't want to run the risk that Libor spikes to 10% or whatever.
There's nothing complicated about this, at least in principle. Derivatives just allow people to hedge out exposures they don't want.
The swap market provides a linkage between the money market ( borrowing < 1 year) and the capital market (borrowing > 1 year), and allows one to borrow (or lend) where the comparative advantage is better.
The 10 year swap rate is then a market number which represents the relative demand (and supply) within the money & capital markets.
The idea of the interest rate swap is simply that some entities prefer to lock in a rate, others prefer to have it float. So they swap those risks.
I apologize if I'm misusing terms - I'm not a finance expert.
The only explanation I can think of is that leverage is used to exploit dumb money that isn't hedged correctly. In which case, leverage is a barrier to entry that diminishes the number of participants in a market and reinforces cartel behavior. Which I would think is a bad thing.