What do you do with a iCould locked phone? It seems like a completely worthless device if it is locked.

Even if the answer is "nothing" it still makes sense they're selling on ebay—people don't know that they're buying a brick, and I'd bet that's extremely difficult to contest via ebay/paypal.

According to the link above, people know they are buying bricks.

I'm sure there are some folks trying to pass off locked iPhones as legit, but there are also people selling them "for parts" on Craigslist and I'm sure a load of other sites. I was just shopping for some test iPhones for work and there was one dude on Craigslist with a dozen or so new iPhones, all locked for like $80 "for parts".

Perfect for parts. New screens aren't cheap. Battery, camera modules, etc.

Yeah, you could part the whole thing out, but there's so little demand for used parts currently that it's tough to make a business case for it.

New screens are pretty cheap these days; under $40 for a new iPhone 6 screen wholesale currently. Used batteries are worth nothing since new batteries are so cheap (a new 6 battery is less than $10 -- why would you want a used one?) Camera, home button, charge port, prox sensor...even if you put all those together you'd barely have $100 worth of parts, and that's talking about new part prices (wholesale).

New screens are a lot cheaper than $200, which appears to be the price of iCloud locked phone.

"genuine Apple screen" vs. cheap aftermarket knockoff? I have no idea if there's much of a difference.

parts phone for repair of others, perhaps?