People who are acting out sexually and aggressively are expressing a need, an aspect of self. They want people to acknowledge it, to react to it. So far, I've been talking about the Palace community mostly in terms of the Palace chat program itself. I think it's important to point out that there's a lot more to the community than that particular environment - and this is probably true of other chat communities. A sign of the health of a particular online community is the extent to which these other resources and paths of communication are developed.
Some people spend a great deal of time there.
I think there are a variety of reasons' why people are drawn to the program and the community. In part, it's simply an cyberspace novelty. But there's more to it than that. On the lowest level, if you're interested in satisfying your sexual desires, there's cybersex Palace style, which means you and your partner can play with avatars. Relatively few people are interested in Palace for sexual reasons.