I would say that mainly those who try to avoid KYC buy in this way, but also those who have not yet found out that there is a much cheaper alternative, whether it is CEX or DEX. As you yourself say, the price of such a device, along with all the costs arising from maintenance, insurance, and paying taxes, does not give the owners too much room to lower fees and be competitive with other players on the cryptocurrency market.
However, the number of such devices is constantly increasing, and regardless of the current situation, I think that it will continue, perhaps even at an accelerated pace, considering that more and more people are learning about Bitcoin and want to buy it in one way or another.
People who are doing shady business definitely avoid KYC. People who are being scammed, not so much. As a result, large transactions are often made by people who are being scammed, not people who are doing shady business.
We've had customers who didn't care so much about the fees as they were caught in the hype or they were only buying a small amount of BTC. We've also had customers who didn't know about cheaper alternatives, or who couldn't use them because they were being blocked by their banks. Unfortunately, these types of customers are not as common as one would think.
It was also interesting to me if Bitcoin ATMs have limits for deposit. With regular ATM, in some countries there are monthly limits of 5k for cash deposit, and it is physically impossible to insert a pile of banknotes in ATM whole. 1 Bitcoin, that is $19k or a solid pack of cash. It will take time before you feed all the banknotes to ATM. I am sure that will gonna cause people's interest, when they observe a person inserting banknotes for 10-30minutes without stopping. To that will be first signs of loosing anonymity. Imagine a persons wants to turn shady cash into 5 or 10 BTC...
P.S. I just cant imagine a person that wants to turn $10 into BTC will care much about KYC and will go to ATM to lose 8-20%.
The limits depend on the company and the law in the country. In Canada, if you want to buy or sell more than $1,000 at an ATM, you have to give out some of your personal information. If you want to buy or sell more than $10,000 per 24 hours at an ATM, you have to give even more information.
And yes, most ATMs will only accept one bill at a time, so it takes forever if you want to make a big transaction.