I'm not saying I think it's wrong, I am just curious how and why people believe that FOSS development should be funded.

Why FOSS should development should be funded is the easy part... At scale, FOSS maintainership and development often becomes a full-time job, just like any full-time software development job.

Users file bug reports of varying degrees of urgency. Community contributors submit merge requests (patches) that need to be tested, reviewed, iterated upon, and merged. Changes need to be documented and releases need to be made and delivered to users all over the world. Finally, for projects to improve, a future direction for the program needs to be planned and features need to be designed so that the project isn't just aimlessly stagnating. That's why people are paid full-time salaries to work on projects like Linux or Blender, because otherwise it is almost impossible for FOSS projects to handle a large number of users and contributors. (There are exceptions to this, but keep in mind that they are exceptions)

Lots of volunteer contributors obviously do good work for FOSS projects for free out of pure generosity and wanting to make things better. I appreciate that and I think we should all appreciate that. But unless they are independently wealthy, they are very unlikely to have the time to commit to spending 32 hours or more per week on contributing to FOSS. In our current world, most people have to make a living and they spend most of their time doing just that. They might have enough free time and energy to write a one-off feature/bug patch to some FOSS project, and that's a great and noble thing, but they likely do not have infinite time to continually maintain or develop a large project.

How FOSS projects get funded is the tricky part, because FOSS funding mainly relies on corporate support (as in Red Hat paying developers to maintain and work on the Fedora Project, for example) and individual user donations (like the ones that you might find on the Blender Development Fund, for example). Sadly many users don't value FOSS, as can be seen in this thread, and so they may never see the need to contribute to FOSS development funding.

I don't understand the idea that people should be paid for FOSS work.

In an ideal world, nobody would need money for anything (food, water, shelter, education, healthcare, infrastructure). We would all do exactly what we want, when we want, and society would just take care of itself.

In the slightly less than ideal world that we live in, everybody should be compensated for work that they do, and people who volunteer their extra time for free to some project or ideal should at the very least be appreciated.

title is saying FOSS is unsustainable but we are here decades later with Linux the dominant server platform (I was there when this was very much in doubt) and tons of our infrastructure continues to run on free and open software.

Much of which, including Linux, is funded by companies and individuals so that talented and knowledgeable developers can afford to spend the bulk of their weeks maintaining these projects. What would happen to if you dropped Linux's funding to $0/month? Obviously development and maintenance would no longer be sustainable.

Sadly not every project is as well-funded as Linux obviously, and there are important pieces of software at every level that are falling victim to the tragedy of the commons because, in some cases, FOSS development at scale is not sustainably funded.