My guess: You (as the business operator) need the flexibility of being able to pay only for work done, to adjust pay based on performance metrics very easily,

My guess: You (as the business operator) need the flexibility of being able to pay only for work done, to adjust pay based on performance metrics very easily, and to avoid the otherwise heavy costs of traditional hiring and firing. You don't want to be on the hook for guessing how many drivers you need on a given day or for a given area. By utilizing them as contractors, they naturally adjust their own numbers as work becomes highly available or scarce, and you're not on the hook to pay them when they're not contributing to your bottom line. As for why the workers do it: In many cases it's likely not their best financial decision, but there is some value to them in the flexibility of the schedule. And the ones that get particularly good at gaming the system (to the extent that it's possible) might make enough that it beats comparable jobs.