@cgarvie:
That is one point: that the seller can price their wares at a lower price point and still reap higher total revenue due to the sheer quantity.

But that is just half the story.

The competition is also MUCH MUCH MORE fierce on the iTunes shop. There are many good software houses with good games competing for the buyer's money and that puts pressure on the software price. One way that Rovio has chosen to give more value to their customers is to launch the level packs for free.