Agreed, selling small items would be difficult.
Early on in SL, there was opportunity to buy "Land" at reasonable price.
Price of desireable parcels has increased along with rents for people who wish to rent space for stores or other activities.  After expenses (tier assesments, similar to condo association fees) there is possibilty for moderate cash flow.

Not all sales in SL are graphic items.  Real world (tangible) good and services are done because of country neutral payment system.  Shipping something internationally is often easier than transferring money to pay for it.