Everyone pays for hosting. How they do it is the difference. On some sites you pay for it with your eyes on advertisers. On some you pay with your data...and eyes on advertisements, because that's practically free money. Here, you pay with investment and in turn get paid. They probably could just cover everyone with the investments of the larger accounts, but they decided that there were certain accounts abusing the system. To deal with that, they decided to put in this system. Now the question is how much to limit small accounts, because the system as it was originally implemented was thought to be too strict.
As to the value of Steem...it's actually a split. There are certainly a lot of bloggers here that bring value...as well as some that are just leeches, but the actual value of Steem is caused by investors and traders, evaluating a number of factors, including the platform.
They've basically just turned it into a game where you have to level up first to be able to use it constantly. I have faith that many that we want to stay will deal with the limits for long enough that they can grow their account a bit. There will also be groups that pop up to increase people's delegations that appear to be really good users.