When printing/publishing books the marginal costs of printing an extra 20,000 copies are tiny, and make the unit cost of each book much lower, therefore making the profit margins healthier on every book sold through the usual chains.
Publishers are therefore keen to get books included in a book club catalogue; even though the specific margins made on the actual deal are often tiny.
It's not the same sort of thing at all as "The Works" which deals with remaindered stock being cleared from publishers' warehouses, and very cheap/poor quality publications.
(Always check "Bookends" on the website; when the Book People do sale items they are remaindering their own stock of books from their warehouse.)
The Book People also have their own publishing brand, and do produce own-brand copies as well. These are high quality, but sometimes cut out some of the extra pages and the beginning and end of books to save a few pennies. But the reason the costs are so low, is there are no production/editorial/proofreading etc. costs; they will simply have a deal with the original publisher to use their 'masters' for the book.
In addition authors get very little from the deals as well; their royalty will be based on a percentage of ... well it gets a bit complicated as to what of ... but trust me what they would get from a book club deal is very little per book. But obviously if that covers several thousand books it adds up, and they get the same advantages as publishers of getting their books read, their name and brand known.
In addition you get readers hooked on a particular author or series. (Many of the books ds1 buys these days we buy on the day of publication or shortly afterwards. You can get good discounts on new publications from Amazon, Redhouse, as well as highstreet bookshops ... but nothing comparable to the Book People deals on older books.)