When shopping for BSO bikes, people are just looking for a recreational ride that is a once in while, which leads them to focus on the sticker price.
Looking at a mountain bike they then get to thinking "Hey, I can ride this around town.
I can take it off roading if I wanted too.
", so more bang for their buck.
They also tend to look at the other components of the bike, hard narrow saddles just look uncomfortable, drop bars make one think they need to lay down to ride, thin narrow tires surely can't be a as comfortable as fat tires, and "why is there no tread pattern on this tire, it is just for nice weather racing".
bicycles.stackexchange.com/users/6782/BPugh
Many BSO's are styled like mountain bikes, probably because the mountain bike features tend to be appealing to people who don't know a lot about bicycles.
Consumers buy these bicycles even though they will never use them on anything resembling a mountain trail.
A thick frame, thick, knobby tires, and suspension make a bicycle look rugged.
The appearance of ruggedness is cheaply achieved with inferior components that don't last, are poorly serviceable and heavy.
This is because the mere appearance of anything is cheaply achieved with a prop which looks like the real thing.
If consumers believed that road bike features comprise the best prototype for an all-purpose bicycle, then BSO's would be road-bike-shaped objects.
Even the very mass of a bicycle could be associated with ruggedness.
Consider that Beats by Dre headphones were found to contain metal weights that serve no purpose other than to make the product feel more massive.
This is because the consumer who knows nothing about audio or electronics thinks that a pair of cans that weighs more must be better.
(Though there is a point there: better loudspeakers tend to have more massive magnets, which make them more sensitive.)
(With regard to tires, there seems to be a widespread belief that the mountain bike tires will grip all kinds of surfaces better, including asphalt: in other words, that they are safer.
This is quite unfortunate.
Consumers should be educated, for the sake of their own safety, that smooth tires provide the best grip on a wet road, in addition to offering a smoother, quieter ride with less rolling resistance).
Someone shopping for a road bike is different from the crowd, and probably more knowledgeable than the average consumer.
Possibly much more knowledgeable.
They won't be duped by low-quality components.
bicycles.stackexchange.com/users/5088/Kaz
It's much easier to make a chunky looking frame cheaply than to make thin tubing cheaply.
The heavier everything is supposed to be the less obvious
it is that the BSO is not what it looks like.
One key give-away is that the mountain bike is always marked "not suitable for off road use".
Road bikes also have to use more expensive components, specifically brifters (combining brake and shifter units in a single mechanism) where mountain bikes can use the separate brake and shifter mechanisms, even though they are often combined into one assemble to reduce the number of steps to put the bike together.
The same difficulty occurs when building cheap but effective caliper brakes, although the BSO solution there is IME to fit cheap and ineffective brakes (the shop I worked in spent a disappointing amount of time trying to find an affordable fixed-gear bike that wasn't a BSO).
What I has seen a lot of is more expensive BSOs that look like road bikes or fixies, but despite paying two-ten times what a BSO normally costs, they are still not usable bikes.
Most were steel framed, and often used Chinese "4130 CroMo" tubing (which if you see it unpainted is the wrong colour, and is both weaker than and fatigues faster than proper 4130).
In Australia a BSO can be had for under $50 if you shop around, and normally run up to about $200-$300.
But during the fixie fad we saw BSO-grade fixies costing up to $600 that we couldn't service for all the usual BSO reasons.
One was "fixed" by rivets through the drive cog into the hub, for example... and it was brought into the shop because the rivets were loose.
bicycles.stackexchange.com/users/7044/Móż
A lot of people think that narrow tyres are dangerous for anyone other than experts, and that the narrower the tyre, the more likely they are to fall off.
They also don't appreciate that there can be disadvantages in having suspension.
bicycles.stackexchange.com/users/25476/BenTaylor
In addition to the other answers, the BSO appeals because it is not like the bikes in the purchaser's history.
Many BSOs forgo the traditional diamond frame in favour of big chunky monotube designs.
These bikes look nothing like the 70s/80s ten-speed, or the Raleigh 20 style, or the grifters and BMXs of my youth.
So when the parents want something "better" for their offspring, the different look appeals.
In complete opposition to the above statements, we also have the retro beach cruiser or coffee cruiser bikes.
These are a little above a cheap BSO, and have a sit-up-and-beg posture combined with sweeping handlebars and relatively few gears.
The pricing is about double what a cheap BSO costs, but the appeal here is the nostalgia and a
"this is what older people ride" mentality.
bicycles.stackexchange.com/users/19705/Criggie
This could well be a regional variation.
I tend to see that most BSOs are "fast hybrid" commuter style bikes.
Straight handlebars, soft saddle, wide road tyres and road suitable gearing.
The mountain bikes that were so cool in my youth (1990s) have largely faded out and road bikes with drop handlebars that my father remembers dominating in his youth are coming back in.
bicycles.stackexchange.com/users/25475/Separatrix
All department store bikes, that I have witnessed, are mountain bikes. Many of them are even full suspension and some feature dual-crown forks.  Why the lack of BSO (Bicycle Shaped Object) road bikes?
Why are most BSOs mountain bikes?
bicycles.stackexchange.com
<shopping><bso>
bicycles.stackexchange.com/questions/38176
bicycles.stackexchange.com/users/3927/Vorac
Many BSO's are styled like mountain bikes, probably because the mountain bike features tend to be appealing to people who don't know a lot about bicycles.  They also tend to look at the other components of the bike, hard narrow saddles just look uncomfortable, drop bars make one think they need to lay down to ride, thin narrow tires surely can't be a as comfortable as fat tires, and "why is there no tread pattern on this tire, it is just for nice weather racing".    Consumers should be educated, for the sake of their own safety, that smooth tires provide the best grip on a wet road, in addition to offering a smoother, quieter ride with less rolling resistance).  Moreover, the features of a mountain bike are easier to reproduce cheaply, however, most of these bikes are not suitable for off-road use. People shopping for BSOs re often unable to evaluate quality, and are more likely to select a bike that looks rugged and suitable for use on and off road. Road bikes can look overly fragile and complex, discouraging casual buyers. It is also cheaper to produce heavy and bulky components that look strong, even if they are poor quality and liable to break or rust. The hard saddle and thin, smooth wheels of a road bike look uncomfortable and more dangerous than thick knobbly tyres, even though road tyres provide more grip on wet roads. There is some regional variation, as the predominant type depends on market demand as well as ease of producing cheap parts.
People shopping for BSOs re often unable to evaluate quality, and are more likely to select a bike that looks rugged and suitable for use on and off road. Road bikes can look overly fragile and complex, discouraging casual buyers. It is also cheaper to produce heavy and bulky components that look strong, even if they are poor quality and liable to break or rust.  The hard saddle and thin, smooth wheels of a road bike look uncomfortable and more dangerous than thick knobbly tyres, even though road tyres provide more grip on wet roads. There is some regional variation, as the predominant type depends on market demand as well as ease of producing cheap parts.