While I'm sure marketing data is part of it, the real value of the card is getting customers to rack up consumer debt. An average interest rate on a miles card is something like 16% and a typical debt carried on credit cards is also about 16k.
Supposing that the airline gets around 60 bps or 0.6% for holding the card, that by itself is about $100 per customer per card if you make it to the top of wallet and more if the bank meets its target profit for that customer, which is a win for the airline.
Mastercard charges 10 cents plus 2.30% for an airline card to the merchant and it's not unreasonable to attribute about a 1.5 cent value to a point. While I doubt banks actually pay that much, if they do, that still leaves around 0.8% profit on every transaction.
Bringing this back to the video, suppose that you want to fly from London to New York. If we plug that route into AwardHacker, we can get that the cheapest redeemable flight that doesn't have a fuel surcharge runs about 40k miles. At 1.5 cents a mile, that's $600, which isn't far off from the $872 quoted for how much the carrier charges per seat, though I think it's finding a deal. A lot of older airline award charts would quote 55k miles to get to Europe, which comes out to $825 dollars (plus taxes) that bring it very close to $872.
The example mother in law is still making the banks money despite not carrying a balance due to the interchange fees and it's easy to see why.