1. Basically, this is a service whereby the provider 'allows' you to use its nameserver(s) for storing your DNS records.
2. There are providers who offer this for free (haven't explored their business model in detail).
3. There are others who offer this for a fee for enterprise customers.
So, what really are the benefits for an enterprise signing up for a provider who offers this for a fee? Essentially, the service provider purports to have a globally distributed, redundant set of nameservers. This provides redundancy, so that requests for the nameserver seldom return error responses. Using technology, they are able to detect the origin of a request and serve DNS data from an appropriately close location. This improves speed.
In summary, this makes business sense only for enterprises. This model would never work for shared hosting and hence many providers provide this for free.
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