Answer: I'm not a fan of the top level answers focusing mostly on fetishes and the idea of "controlling women" so I want to give a more nuanced answer about the TikTok livestream economy.
When we look at TikTok lives, many of the unique ones are all about getting pennies from people (since the gifts go that cheap) and the occasional dollars if they're lucky/smart enough. There will be lives that are just polls labeled "donate X gift for Trump/Y gift for Biden" or "donate to make me restart the game" or "donate to play loud noises while I'm sleeping" or "donate to have spawn an NPC with your profile picture to try and survive this automated tower defense game and have your picture standing in the middle," etc. TikTok has a strong basis of getting a steady flow of content and many of the livestreams will allow you to donate a very small amount (again, pennies) for essentially immediate feedback and a *quick dopamine hit
While yes, in this particular example, there is a sexual aspect to it,
NPC streaming is more akin to ASMR in that the sense that it's a genre that goes broader than sex. The trend started with Japanese tiktokers and a few that I've seen felt more akin to performance art (actually mimicking an NPC with limited animations) and there would be even face offs between characters. A good example of someone who successfully does NPC streaming for goofy purposes rather than lewd is Japanese TikToker
Satoyu0704. People donate to see the ridiculous reactions and get the short term cheapo dopamine hit that way.
Finally, this isn't a super new trend, it's been around for at least a year or so at this point, maybe even longer. Tiktok is a weird platform and coverage of things coming out of there usually has an air of outrage associated with it to varying degrees of validity to that outrage. Chances are, on places like Reddit or Twitter or even TikTok itself, you're not getting a complete painted picture on Tiktok as everything is so decentralized and users are all in their own bubbles. Regardless, I hope this answer paints in the pieces that might be missed by other users.
Edit: forgot to finish a sentence.