"I don't really understand how they are putting their reputation at risk this way by letting third parties publish non-vetted content on their site."

I read it as a measure of their financial desperation. They're eating their seed corn (their reputation is their most valuable asset in that without that, what else do they have?), and, well, what other choice do they have? HN has been talking about the other choices for years, but every time I see someone try one, they sink.