In a lot of cases their clients are businesses who bulk buy the keys, brand them and provide them to their customers either for free or at a discounted price.

Those companies are usually financial services, online games with monthly subscriptions, and corporate IT/Security services. So they have a high customer LTV and the investment is worth it for them.

Yubico was smart to go after that market. It is costly to design, mould, manufacture, sell and support a hardware product, even something as small as this. Since you don't want your 2FA company to go out of business there is good value in knowing they have a stable business model that can actually support a company rather than just burning capital.

They do lots of stuff. A YubiKey 4 has GPG Smartcard, U2F, PIV (SSH,CA, Windows Remote Login), Static Password, Yubikey OTP, Challenge Response Mode (HMAC) and HOTP. It does a lot of stuff, I am amazed how cheap they are.

Pure U2F sticks can be done much cheaper. The Yubikey one only costs 18$, but the U2F standards was designed for cheap devices. You can get U2F sticks for less then 10$ on amazon.

Yup. they're a bargain compared to most solutions

Probably because they're capable of way more than you're using them for. The ones that just do U2F are only $18: https://www.yubico.com/products/yubikey-hardware/