It's all about acquiring customers. It costs money to get and retain customers, but if you do it right, you get their repeat business, plus word of mouth. A crazy promotion is just that - promotion. They want more customers, and some people will jump at the chance to get bargain hosting. For some people, a $100 outlay for a year's worth of hosting is a show-stopper.
This current promotion catches my eye because it's more like "Register a domain, get a year's hosting FREE."