The significant appeal of the penny auctions comes from one source. The hope that you can get something for nothing, or at least far below its retail cost. If lady luck is with you and you end up the winner, you have managed to secure an item at a really cheap price.
There is even appeal from the perspective of the sites owner. They have a profit to be made but in order for that profit to be realized they need items that people want to bid on. The more bidders there are on one product, the greater the chance of the owner making a substantial amount of money. Remember those fees you have paid in order to bid? They go to the owner over and above what the item ends up selling for.
There is money to be had by both bidder and owner. This is only in the case of both of them handling their part of the auction to the best of their capabilities.