People love watching X-Factor because they can pass judgement on the talent of others on-stage. The same is true for Survivor, Amazing Race, the Biggest Loser, etc. If it is on television, shot on video and doesn't involve actors reading from a script, the show survives based on an audience's judgement of what they see. It has nothing to do with reality. It has everything to do with fooling the audience into reaffirming that there are, actually, people lower on the totem pole after all (thank god...).
Reality TV serves three key functions: it is cheap to produce for all the reasons people say. More importantly, it is immediate. Viewers don't dare record the show if their friends will be talking about it tomorrow. This immediacy, codenamed "event" television, allows the producers to sell advertisements inside the show because the advertisers believe more people will be watching it live compared to ordinary TV shows.
The third key function is the one described in the article: it conveys a sense of community. What the article does not say is that the community is illusory. You think you are part of a community, but in reality you are one of millions of isolated people opening your homes so liars and hustlers can enter. As the article says:
A good player on one of these shows is, to me, as talented at what they're doing as the average ball player; people will scoff at that but I honestly think it's true: the ability to manipulate 10 - 20 different personalities into doing what you want them to do is just as remarkable a skill as throwing a ball 100mph.
This is utterly absurd. To throw a ball 100 mph requires hundreds of thousands of hours for the pitcher himself. Not to mention the coaches, trainers, physical therapists, nutritionists and others. All working at the the peak of their profession. People have been manipulating each other since humans formed communal groups. They've only been throwing balls 100mph for a few decades. That is a significant human achievement, representing the dominance of the human body by science. It may not be an important achievement, but it is notable, on par with the 4 minute mile.
Furthermore, the notion that "manipulat[ing] 10 - 20 different personalities into doing what you want" is laudable or should be encouraged is heinous. We call these people con artists. We are supposed to avoid them, not relish in their success.
And anyway, manipulating 10-20 people is nothing. The producers of these Reality TV shows manipulate millions of viewers every night into handing over their valuable and increasingly scarce leisure time in exchange for receiving advertisements. That's quite a bargain they got you to strike!