First, I'm not an endorser of the whole "graded cards" phenomenon, though other collectors have opened my eyes to the value of the service given how much buying and selling happens on Ebay these days, rather than in-person the way things used to be. So I've been sold on that aspect of it. And I can appreciate the value that it brings to the table.
But I think the other question is, "who is buying" is more of a psychological or philosophical question about hobbies in general.
That is to say that, rather than ruin the Wacky hobby, I think PSA and their ilk simply give you "another thing to collect" if you're so inclined to find collecting that thing enjoyable. For whatever it's worth, building a "high-grade PSA" set of some series is a task that someone can take on, like any other collecting hobby. Is it expensive? Yes. Do many of us not see the point? Of course. But that can be said about our hobby at large, without any involvement from PSA at all. And if you can have fun hunting down those high-grade PSA's... well, I GET THAT hunting part of it. It's fun. I personally don't give two rats craps about PSA slabbed cards, but I get it. And I think that goes for Golds or "created rarity" modern chase cards.
Is a PSA-10 graded card worth 50x a VG ungraded one? Well, is a die-cut Cracked Animals worth 5,000 times a great-looking reprint? To some people, it is. But not to me.
So, if graded or slabbed cards don't appeal to you, I think you can look at these services like PSA as almost an entirely different hobby from the one you're engaged in. Then you are as to the civilian looking at most of us, who couldn't care less about Wackys, wondering why we would waste so much money on something that can't possibly be worth what we paid.