Why do block builders subsidize blocks?

I listened to a podcast where Matt Cutler (founder/CEO of Blocknative) mentioned that some block builders pay validators more than the block value for them to select their blocks.

If a block is worth 1 ETH, then one incentive of a builder to offer 1.1 ETH would be to raise their market share and thus attract valuable bundles from searchers.

Data indicates that block subsidizing has become quite prevalent, and sometimes the overbidding of builders is by large amounts - Matt mentions that this is "because of value they are able to recognize off chain" but he does not explain this further.

Can anyone shed further light on the reasons for block subsidizing of builders?

Edit: Relayscan.io has data on both the profit and loss (i.e., subsidy) of the blocks of each builder.