Most MLM's are pyramid schemes. The ones at the top stay in afloat by continually attracting new suckers to enter in at the bottom. For 90% or more of the people in the pyramid, it's always a losing proposition.

There are some network marketing setups that are legitimate, but still, people rarely make enough money in them to justify the expenditure of time. They'd usually be better off with a regular job.

For starters, most MLM programs are indeed NOT pyramid schemes. Most people don't even know the meaning of a pyramid scheme so remarks like that show a lack of education on the subject which is detrimental to Multilevel Marketing.
When you go purchase groceries from a large chain, a very large portion of each dollar goes to corporate to cover overhead such as advertising, warehousing, the actual store, employees, etc. As you know, the cashiers and other employees make a very low income for the work they do. The people at the top are making a very good income. That sounds very pyramidish to me!
With MLM companies and Direct Sales, they choose to market differently. Rather than have actual stores that cost a great deal of money, they choose to put their product out in the field and let people market it by word of mouth. So the money that corporations spend on overhead is now distributed throughout the field to the people that are selling the product for them. Some companies, like herbalife, believe that word of mouth is a far better sales strategy because most people who experience results with their product are going to spread the word and help others receive the same results. Nothing wrong with that!!
So they distribute the cash among the people who are doing the actual work. Grocery stores and other shops could never afford to do that because there are too many middle man expenses. Both ways of marketing are effective and lucrative but if someone has an exclusive product they often don't want it just sitting on the shelves and hoping people notice it. Therefore, they find a target market and go to work getting the product directly to the consumer.
As an MLM representative, I earn a very lucrative income and part of my job is to make sure others do the same by teaching them about the product and marketing. You do end up with people in your organization that are unwilling to work so you just bypass them and concentrate on the people who are. That said, there are many many people out there, including professionals such as Doctors and Lawyers who are earning an incredible income that will also be residual.
I hope that has answered your question.