They don't know any different. Or they don't care. I want to vomit a bit each time I go to the Jewelry Browse categories and see all the cheap, factory made necklaces that the Admin here are just CONVINCED are handmade by one person.
Each and every piece I make is unique - it's sterling silver sheet and sterling or fine silver bezel with stones that I've selected. The backplates are hand sawn from sheet, the stones are hand set in the bezels, the whole thing is polished by hand or with my Dremel tool. And my sales this year were doing much better - until about August or September. And then Chad announced that we were allowed to outsource to manufacturers (as long as they're disclosed and have sound, responsible business practices, of course). But the factories from those other countries do not have fair or balanced business practices, and we all know it.
Horrible working conditions, children working in the factories - we all know that's what's happening. Admin knows it, too - they're more concerned with their bottom line than what the site was originally started for, which was to support handmade artisans.
I've got three shops here - but I will also tell you - I've got two stand alone web sites for my products. Etsy ain't the only game in town, and they don't deserve all my hard earned money.