My take was that it was crafted to be optimally engaging to a child of about four years of age. With no other purpose. Maybe even semi-automatically generated. The subject matter is a common fear of children. The video does not have enough to push it quite over the edge to any horror/revulsion response. Any particular frame would not be too out of place in a children's cartoon. As an adult, it disturbs mostly when you realize what's going on behind it conceptually.
Obviously worked as intended, given how many views it got. https://www.bbc.com/news/blogs-trending-39381889
There are thousands of video variations of that theme. Someone else here mentioned people cosplaying the characters in creepy ways. I think it started there and evolved rapidly into automated production of reptile-brain trigger material.
There are all sorts of conspiracies from some psyop stuff to AI/ML generated content. I have not ideas what to even begin to think.
The easiest answer I suppose is just some companies found an easy way to mass produce videos towards an demographic that will not mind mindless clicking, and that that will translate to more views and more money. That still doesn’t explain the bizarre and disturbing content some of them put out.