That kind of service (AirBnB or otherwise) has a few things going for it:

1) "whole place" rentals are really nice if you're traveling with kids. Like, really nice.

2) It used to often be cheaper to get an apartment or entire house through AirBnB to get any but a bottom-tier hotel (granted, much less true now)

3) It gives you a lot more location flexibility. Ordinary neighborhoods or apartment buildings like a local, maybe walkable to a bunch of cool stuff that's not walkable from where the hotels are in the city, or rural housing sometimes in places where there's not a hotel for many miles.

4) For any kind of getaway where you expect to mostly hang out at/around your accommodations, hotels are so awful I wouldn't consider them an option, short of maybe resorts. Meanwhile you can get a nice AirBnB house on a lake go kayaking right out your backdoor and hang out reading by a wood-burning fireplace and all that. That kind of "the accommodations are the attraction" thing isn't really what hotels are for (again, except, maybe, resorts—but even that's not really the same thing). Granted AirBnB didn't invent this and isn't the only way to get it, but it's one sort of thing for which AirBnB is an option and hotels really aren't.

5) AirBnBs may no longer consistently beat basic hotel rooms on price, but they're still often much cheaper and available in more areas than equivalent apartment-style hotel rooms with kitchenettes and multiple connected rooms and such—these are often limited to long-term hotels, largely near airports and aimed at business travelers, and big expensive suites in fancy hotels in the city center.

Right, if I understand this correctly Airbnb makes sense if you are doing a multi day trip with a large-ish group and want to spend a bunch of your time in/around the property.

What surprises me is that people are conditioned to look for an Airbnb for all travel accommodation, not just the appropriate niches.