Well... because it is free, just not as in beer ;) Okok, the first episode is even free as in beer :p
What am I talking about? Steel Storm, an indie arcade top-down shooter:
Steel Storm is based on the GPL engine Darkplaces, and its media license is even "almost" FOSS too with the CC-BY-NC-SA license. This makes it possible to use its engine enhancements (like a in-game editor, a really nice menu system, etc) also in other open-source games!
I think this is actually not a bad compromise between trying to cover some expenses and still making open-source games, and that commercial efforts are not strictly incompatible with FOSS game development can be discussed here ;) It would be cool though, if they would consider a "ransom" design also, i.e. that the game becomes completely FOSS after a certain sum of sales has been reached.
Oh and I almost forgot: you can pre-order the second episode for $10 here