MLM can work, if it is limited in the number of downstream. The concept of MLM is actually quite simple:

Sell = Cost + Profit (P)
Profit = Seller's Cut (B) + Upstream Cut (L)

The profit (e.g. 30% of the cost) is shared between the seller and the upstream. Each upstream is a certain percentage (e.g. 10% for each level). If there is only 1 level of upstream, the seller gets P-L, or 90% of the profit for the sale, each level pays 10% as "commission" to the upstream, i.e. L3 will have to pay L2 20%, L2 keep 10% and pays 10% to L1.

For (legal) MLM to work, the first premise is that the profit has to be high enough to sustain the profit sharing and generate sufficient motivation to get people to sell. i.e. if the number of levels increases, the lower level may end up with only 40% of the profit and pays 60% to the upstream. In such case, don't think anyone will be motivated to continue to sell. The second premise is that the number of levels must be capped. In doing so, the MLM is restricted in how it reach out to "real" customers. For L = 1, this is essentially the same as normal marketing approach.

Since commission is a percentage of profit, unless the original profit of the product is obscene, the commission is actually not high (e.g. 10% x 30% or 3%). The lower the commission (e.g 5%), the more levels and wider the MLM, hence it is a balancing game. The higher the percentage of profit, the less likely the product is of value to real buyers.

Since the earning is basically a function of the agent's network, the larger downstream the agent has, the more he/she gets from commission. This is akin to running a business with many many salespersons. However, MLM does not solve the fundamental issue of
Supply and Demand of Goods being sold.

Hence, MLM is really just a quick and effective marketing tool. If the product is real and competitively priced, the actual commission earned will probably not be high. If the percentage profit is obscene, then either it doesn't sell, or the product may not be legit.