A naive explanation is that only awful people go there, and there are a large number of those types. But that'd be mistaken.
I don't know, but it seems like an interesting question.
I don't think it was ever meant to make money. Lots of great (for various aspects of great) things exist for non-monetary reasons.
It's true that off-topic posts are removed, but I'm mainly curious why this kind of "say whatever you want" attitude is so pervasive on 4chan yet doesn't kill the site. On Reddit, for example, comments like that would be moderated via downvoting, which physically hides the comment unless the user clicks on it. That's still a form of moderation.
I don't hang out on chans but sometimes end up reading them for various reasons.
I think the constant noise and random insults actually are moderation: they keep away people prone to butthurt, who due to their stubbornness and obnoxity are absolutely the worst fun killers and threat to any discussion. Normally people call each other retards as a matter of course and don't give much fuck, but if you try to argue emotionally then you are flamed to the death.
To me it was quite eye opening to read a bit of Encyclopedia Dramatica once. Many times I saw it throw shit all over some people or idea just to click on the "see also: some ostensibly opposite idea" link at the bottom and see them throw shit all over that one too. That's a very simple and elegant solution to tribalism if you ask me, HN totally could take inspiration from them because the mods keep complaining about tribalism here :)
Communities with better moderation are apparently more popular.
Also there are many active topical boards like /an/ /cgl/ /fit/ /u/ you're not reading!
People really do hang out on 4chan, though it's lost some share recently to 8chan, but 4chan is certainly a very large forum, the 200k+ current users, as displayed on their homepage too, confirms this.
For a place where you don't have to worry about drive-by downvoters, for all its faults, 4chan is excellent for getting your opinion across.
I don't know how accurate this is, but to put some numbers on it, Reddit seems to be #9 and Twitter #11 according to Alexa [1] and 4chan is rated much lower [2].
Although, Hacker News ranks higher than I expected [3], which seems suspicious. Perhaps there's a better way to measure it?
[1] http://www.alexa.com/topsites [2] http://www.alexa.com/siteinfo/4chan.com [3] http://www.alexa.com/siteinfo/ycombinator.com
It'd be harder to get away with on HN, but maintaining the illusion of a tight-knit community for as long as possible is pretty crucial to the site's success.
I'd rather have no moderation than lax moderation, which is why I'm in favor of decentralizing imageboards; the nntpchan software, which is an imageboard over nntp, is very good for this. Perhaps some system using bittorrent technology, too.
To reply to astrange (I am unable to reply using the usual method because the HN mods don't like it when I post quickly, so they've stopped me from doing that, ironically in this discussion about moderation):
I wasn't trying to say that 8chan is unmoderated, I recognize that it is moderated, because of the "only legal content" rule, rather I was trying to say that an unmoderated imageboard could exist in theory, but an imageboard which insists on only legal content is of course moderated.
Are the users haemorrhaged from that to the detriment, or the benefit of the site?
Others boards such as /mlp/ however do not show such growth into other boards, perhaps because the rule against ponies is stronger than the rule against racism.