When a business is acting in an abhorent, immoral, or unethical manner profit and greed are nearly always the fundamental reasons.

Depends on the ticket. For lower price tickets, generally speaking you don't get anything if you miss your flight. For Business and First class tickets you can generally re-book or get the ticket refunded if you miss your flight. There are also some insurance policies you can get which will refund at least most of your ticket if you miss your flight due to medical or family emergencies.

There are other reasons that this can happen. An aircraft change (due to maintenance issues, for example) might result in fewer seats being available. In this case, the airline needed to relocate some employees and seats weren't available. For the record, I believe they handled it very badly.

If they sold tickets up to the plane is full, no more: they would have to charge people for missing their flight since the seat left without them. While that might be legal (and moral?) it isn't something people like to happen to them, so the airlines sell just a little over so that they can tell the guy who missed his flight, "sorry, but you can use your ticket on the next flight so you are only out your time."

In short overbooking when it works right is a way to earn some goodwill from people who make a mistake.

I've never seen EasyJet or Ryanair overbook flights (and they operate at WAY higher load factors that legacy airlines - Ryanair is up to 97% load factor on average).

Edit: looks like Ryanair actually doesn't overbook. "Ryanair is the only airline in Europe that does not overbook its flights; therefore Ryanair has eliminated the possibility of passengers being denied boarding due to overbooking."

so instead, sell a couple of seats twice, and bet that not everyone will show up. if you're wrong and everyone shows up, you have to pay people extra to take another flight, but that apparently happens infrequently enough that overbooking makes money over the long term.