Provides liquidity by standing ready to trade both ways, and is compensated through the spread.
The business model is the law of large numbers: capture a small edge thousands of times so daily P&L concentrates tightly around a positive number. The same total edge taken as one large bet has enormous variance.
The real profit equation is not spread times volume. It is spread captured from uninformed flow, minus losses to informed flow, minus inventory losses, minus costs - and adverse selection is what makes the second term large.