This might get a little long. The dog in that picture doesn't look like an American Pit Bull Terrier, it looks like an American Bully. I would speculate that it is probably Razors Edge, Gotti or greyline breeding? I feel so sorry for those fashion accessories.
It is about $$ and what is the "in" thing. Granted some really do love and care for their dogs, others use them as breeding machines to practically make a living off of. You are right in believing that they are poorly bred. They are bred for color and size above all else which doesn't work out too well. They usually do have health problems, (I'm not saying always), especially the blues as they do many blue x blue breedings which is not a wise thing to do. The health problems can range from minor to major skin allergies, food allergies, demodex, gastrointestinal problems, some other defects which can really be a number of different things, shoulders slipping out sockets, double jointed knees, one female had her stomach in the wrong place and she looks very weird her body was also overly long. Another problem in some would also be crippled and severe arthritis in older age. Not all of them get this, it depends on how bowed out they are in such. Even standard bred APBTs can get very bad arthritis at 9 or 10yrs old and have to be PTS far to young when they have structure problems. This isn't to say all will have these problems but it is a higher chance because most breeders don't cull. I'm not saying a conformationally correct APBT can't have health problems either.
I have noticed that on the Pit bad breeders list most of them are the people breeding this type which tells me to stay away from them. While I don't think it isn't right for a breeder to not guarantee health of a pup the buyer chooses to take a huge risk when buying this type of dog. Then they complain about the health problems. Just like the puppy mill pups people buy that have health. Big risk, why chance it?
They are not bred to work so it doesn't matter that they are not functional and can't work. You are right again in believe that. They tend to also have shallow chest and be short winded which isn't going to help out much in working. Many are also kept over weight. They are bred purely for a cool looking dog in the opinion of those who like them. They are quickly becoming the English Bulldog of the Pit world. The English Bulldog isn't exactly healthy, especially when it comes to structure and they are not a functional dog who can do the work they were designed to do or other substituted task. EB's breathing is also not that of a great athlete and their wrinkled skin can cause health problems. EB's have a structure that would be considered a defect in other breeds but it is part of their standard, they also usually can't breed or give birth without human assistance most of the time. EB's are still bred by many fanciers and the same goes for the American Bully. Just shows what man will sacrifice for something they want. I obviously don't have a problem with creating purebred dogs, I just see it kind of wrong to make breeds that have so many health issues, goals should be to minimize them.
Some also speculate that some of the dogs are crossed which is probably true. This is true with other Pit type breeds too, not just them, people cross breed. Other breeds it happens too, even on dogs with AKC papers. One person admitted they hung papers on a dog that appears in several dogs pedigrees I've seen. A breeder of another line is said to have mentioned other breeds were used in making the dogs but then later people blew up that he was misquoted and that only AST/APBT were used to make the dogs. There are some of these dogs which are extra large and have the build, head and loose skin of a mastiff. American Bullies can range in their looks as those particular ones no doubt look like Neos.
Here are a few examples of cross bred APBT x English Bulldog. Not all too amazingly they look very similar to some of the Pits you see today.
Here is a link to Am Bully info. Although it isn't much to read on. The standard is very close to the APBT/AST standard with just a few differences. They list nothing for health problems.
http://www.dogbreedinfo.com/a/americanbully.htm
It also reads this as part of the description.
Physically, the American Bully has an impressive, athletic build, which is both muscular and defined, and displays strength and agility.
They have far from a functional athletic build. If those breeds just like with the EB like that build, thats fine, but why call it athletic if they are not? I don't get it. I've hardly seen too many muscular AmBullies either. I did see an awesome in shape toned son of Gotti, he actually had a decent build too, only looking like a big boned AST. But the vast majority of them are not just out of shape without muscule they are grossly overweight I would think one wouldn't want to strain that structure with extra weight but thats just me. They are likely a strong breed I'd imagine, but agility? I don't see them as agile, they are too bulky to have swift movement and flexibility. Many APBTs are agile and other breeds, greyhounds, sherpherds, Am Bully isn't one that comes to mine.
I'm going to be outside with my dogs before it gets colder/darker but I will put up some pics of my dogs from the front to compare later.