1) To reach a wider audience, same as with movies. Summer blockbusters aim for the teenage audience and assume that adults will head there anyway, due to lack of choice.
2) Not that I'd notice, apart from Bioware.
3) Would retro-platform and puzzle games still sell like cupcakes if they would cost 60$ each?
4) The only thing it did (in my opinion, obviously) was to push more games on the wrong side of the uncanny valley, or right into it at worst.