This means that free Kindle books may "outsell" all other book types on Amazon combined (paperback, hardcover, paid Kindle). The main limitation is that there just aren't that many free eBooks in the Amazon store and most of them are pretty obscure, so outside of the top few hundred,...
From a promotion and payment perspective, the biggest downside to KU from the beginning has been that authors no longer get paid for books that readers borrow and never read them. We all have that stack of books that we keep telling ourselves we want to read, but never seem to get to....