Answer for non crypto geeks:
The money for blog rewards comes from distributing 5% each year (or now 7,5%?) of the market capitalization of the steem platform. Just imagine Mark Zuckerberg would sell 5% of his Facebook stocks each year and distribute the dollars to great posts. Why should Mark Zuckerberg do that? Because he hopes to attract great content providers, which then attract more people to read it and use his platform. The more people join and use his platform the more his platform becomes value the more he can distribute. Mark Zuckerberg dosnt do this yet, but the decentralized steem platform does this.
But what is happening now if no users will join anymore? In the long run the plan is that steem dollars become a stable easy to use currency. Currently mainly banks create new currency units through borrowing money. Instead of giving out new currency units as credits like banks do currently, the steem platform distributes them for great content. So if steem dollars will become widely used there is a lot to fairly distribute.
For crypto geeks:
In Bitcoin each year Millions and Millions worth of new coins are distributed through ¨wasting¨ a lot of energy.
Instead of wasting energy the steem platform distributes them as a reward to great content providers.