It's common because people can't really afford them :-), and don't want to finance the full amount if they're not going to keep the vehicle past 3 years anyway.
One nice thing that a lease offers is a defined cost. If your luxury sedan turns out to be a basket case, the warranty covers the problems during the lease, and you can simply wash your hands of it at the end of the term. Trying to sell a depreciated-to-$40K car with problems is not easy.
Like 0% financing, it's possible that they're irrational from the perspective of a financial institution but overall good for the manufacturer because more cars get sold.
Also agree that leasing helps fix the cost. Besides reliability issues, you win if depreciation is higher then was estimated up front (the one time I leased, the car ended up worth several thousand less then the final balloon payment so I simply turned it back in).
If you want to drive a new car every three years, and you buy & resell, VAT will cost you a lot more then a lease.