I think it's safe to say that Buzzfeed remains an enigma to most people, even in the digital media industry. They do things so differently than everyone else  and in such a non-obvious way , and yet how is it that they are worth so much ?
There's been a lot of talk about their internal tools and platforms, but since no one outside the company uses them, they remain shrouded in speculation. How else can you explain Episode 40 of The Exponent podcast by Ben Thompson and James Allworth, two of the most respected tech and digital media analysts out there. At around 16:55 of the episode, James asks Ben, "Have you seen any of their tools? ... There's all this talk about the tools and the learning organization. I understand it conceptually, but if you're a writer sitting down to write one day at Buzzfeed ... what is it that the system gives you that gives you an edge over the competition?" Ben then hypothesizes that it's about making it easier to create a listicle, and then makes some other highly abstract conjectures about the tools, what works, what channels to use, ending with, "quite frankly I don't see how that's any different than a newspaper sharing its actual page with an advertiser. They're just sharing the tool, and the canvas. They're not sharing the actual writers ... " 
But Chris Dixon and Jonah Peretti sat down last August for a podcast, and did a pretty good job of explaining exactly how and why Buzzfeed works, in concrete enough terms that I feel like I finally get it. There's no need to explain how listicles and adorable cat pictures work, but I'll do my best to try and unpack the three parts of Buzzfeed that are perhaps less obvious based on what I've heard other say about them:
When Peretti helped found the Huffington Post, he got to witness the construction of a sophisticated technology platform that was built entirely for the benefit of the editorial team, while the ad team's platform consisted only of simple banners into which the ads would be slotted. When he launched Buzzfeed he wanted to build a platform that was for the advertising side as much as for the news and entertainment editors.
In other words, the Buzzfeed business team uses same tech to make their ads go viral that the Buzzfeed editorial team uses to make their content go viral. Buzzfeed's "ads" don't even have to run on Buzzfeed; they can run on whatever social network they want. Given that Buzzfeed's editorial team writes articles for specific channels (e.g. Facebook, Twitter, Pinterest, Whatsapp, etc.), I can imagine that the business team gets credit - ie paid - for views or shares of the ads they create, wherever it goes. Combine that with the way each piece of a Buzzfeed post can be shared separately and you can some interesting business models. For example, if a piece of branded content gets 1M views on Buzzfeed but 11M views on FB, 2M on Twitter, and 4M on Pinterest, Buzzfeed might get paid for 18M total views . If that sounds expensive, remember that from a media buy perspective this is "free" traffic for the brands, vs buying the views directly on each social network.
Once you understand that editorial and branded content are being handled with the same tools and derive learnings from the same places, it follows fairly naturally that they follow the same form. This is the so-called "native advertising" that at least when well-executed doesn't detract from the editorial experience. One example is fashion magazines. As Peretti puts it, "you could go through Vogue and rip out all of the ads, and it would be a worse magazine." The really great branded fashion photography enhances the really great editorial fashion photography. Another common example is the Super Bowl, which a lot of people watch "for the ads". Even Google Adwords are an example of brand-sponsored content that runs side-by-side with organic content, to a certain degree powered by the same technology but separated completely in terms of organizational responsibility (the proverbial "separation of church and state").
When you go back and look at the history of advertising, it look a lot more like Buzzfeed and a lot less like the web. Radio broadcasters read out their sponsorships between reading news stories. Television commercials are 30-second video and audio clips that attempt to make an emotional connection and tell a story. In-theatre movie previews are like mini-movies. The list goes on. Web banners which have nothing in common with the page format are the weird anomaly, not Buzzfeed.
What I love about Jonah Peretti is that he is a serious student of the history of media. I've always felt that great founders view their industries through the lens of the long arc of history and he's no exception. When you read his staff memos, he references Halberstam on the birth of Time Magazine; the great battle between the New York Times and the Herald Tribune for dominance of the largest media market in the country; Edward Murrow at the British Press Club . Most of the web is still, oddly, stuck in the Bulova watch age , and Buzzfeed is one of the few media organizations that is capable of truly original thought and business models for the web.
 Which is not to say that no one tries to copy them. See for example http://mashable.com/2014/07/10/an-israeli-buzzfeed-copycat-is-suddenly-in-the-top-10-of-facebooks-publishers/.
 A common question when reading Buzzfeed is, where are the ads?
 (though I can imagine them having different rates for shares on each site)