If they have a really good book, they make twice what they would have. If they have a really bad book, you're only out about half what you would have otherwise been forced to pay them. Either way, they get a least a minimum up-front to bank. Whether these are intrinsically good or bad is irrelevant, though, because royalties for small press are a good reason for one reason, and one reason alone. And, there's investors.
Investors can be a pain to work with, and ultimately do have to be paid back.
What they are doing is shouldering much of the fiscal risk in return for a good chance at making a significant profit. They are not that common to the RPG industry, alas, but they are useful, for one reason, and one reason alone. All three of these cases, with their flaws and merits, are in the end useful to the small publisher for the one distilled reason. Because they solve the problem of cash flow. Really, it's almost like a game.