It's simple. Playing with friends in multiplayer games is far more fun than playing alone. Playing with your own TV screen, instead of an annoying fraction of one, is far more fun than playing alone. Combine the two and you have online gaming.

Obviously, there are plenty of douchebags online, but playing with a group of friends online is way, way more fun than playing against bots or something lame like that. And if you want to play alone, you don't have to listen to what other people say. I don't really think I'd want to play online without a headset, so it's a good thing it comes standard with the Xbox/Xbox Live; it's really a must-have part of the experience. So is having friends, I guess.