The reason is because private servers are not operated by Blizzard-- thus the players who play on them do not profit the corporations to which blizzard is the subsidiary of.
There are multiple private servers you can join. However, if a private server becomes too popular, then blizzard will see it worth their legal resources to pursue a court injunction to have the private server host shut down.
But, just like the pirate bay, the server host/s MAY be well networked in multiple countries, and can outsource the hosting of their private server to another country. This makes enforcement of such court judgments extremely difficult to legally pursue-- as asking a foreign judiciary to enforce a U.S. court's judgment can be extremely difficult (and costly).
Thus, many private servers are not worth the resources to pursue legal action against.
Basically, it's just taking something apart to see how it works when you put it back together again.
And yes, very much against ToS.
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