That is a B-H-E business model. It has worked for them for years.
I started with them, and eventually moved to my own server, processing, CMS, store, etc.. But they have done very nice. They appeal to mom and pops, niche and foot webmasters just starting out. They take away a lot of the risk for first time webmasters.
Long story short, you make money. They take a percentage. If you do not make money, you are out the domain name reg fee.
Good luck champ.
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Enough Said. 
"Would you rather live like a king for a year or like a prince forever?"
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