despite the fact that hosting images is orders of magnitude less bandwith and storage requiring than videos.

In general, yes, when comparing images/video of the same resolution. But if I compare an 8k image to a low quality video with low FPS, I can easily get a few minutes worth of video compared to that one picture.

As you said, it definitely costs money to keep these services running. What's also important is how well they are able to compress the video/images into a smaller size without losing out on too much quality.

Additionally, with the way ML models have made their way into frame generation (such as DLSS) I wouldn't be surprised if we start seeing a new compressed format that removes frames from a video (if they haven't started doing it already).

peertube uses webtorrents to share bandwidth among users: if you're watching a video, you share the data to other users at the same time.