What are the differences between different book publishing options that are available?

Hey fluther, long time, like the redesign…

So I always hear/read about authors going to publishers and some being turned away/rejected by x number of publishers. And I was wondering. Since you have Lulu, Amazon, Blurb etc. Why would you bother with the other people who might turn you down?

Is it because they have some sort of deal w/bookstores and will market your book for you for FREE? I’m guessing not, then why not just spend the money on advertising yourself or hire a firm etc.
Is it because only those kinds of publishers will get your book on bookshelves? I’m confused.