They just hope not many people ever use what is advertised. The common practice of "overselling" (based on the proven statistic that 90%+ of hosting customers never use anywhere close to all their "plan" resources).
Here is some simple math to illustrate. Look at the cheap-end dedicated servers like 1.3 Celerons with 512 MB ram and say a 60GB hard disk (one). With a basic cPanel this will cost $80-$120 with a "bargain" sever company that doesn't provide administration or security or updates (the host has to be qualified to operate and maintain the server themselves).
OK most dedicated plans come with 1,000GB bandwidth. So even on a "cheap" server from a "bargain" company they could only host 8 120GB plans without overselling. 8 X $5 = $40. Can you see any way to turn a profit there?
Customers in hosting are very unique. They are people who would never buy a fake Rolex watch for $100 or expect Starbucks Coffee for 25 cents a cup but they will jump all over offers like these. Especially if they are not so obvious...say these guys were offer 60GB transfer for that price on that same server; that would still be $80, barely the cost of the cheapest server much less any profit or CC processing fees etc. Still no way to make a profit.
ANY type business must make enough profit to be worth being in business. If your server costs $100 and you don't clear at least $3 AFTER you pay all your bills and pay yourself something you would be better off putting the money in a basic savings account at 3% interest. No risk, no work, same profit.
But most hosting "shoppers" seem to forget all that and just compare " host A has this for $6.95, host B has the same thing for $5.95, host C has twice as much for only $2.95...Gee I'm going with host C, what a great deal!!!"
A few months later they are posting about how their host went out of business or is down all the time and takes 2 days to answer a support ticket...where can I find a good host for $2.95? Like they never learn.
The old saying still holds true..."if it sounds too good to be true, it usually is"