Whats is Steem and Steem it ?

I recently came across Steemit, a Reddit-esque platform which seems to be running on the Steem blockchain. It looks like it is paying its users to post and curate content. However, it looks rather leery that essentially a lengthy blog post could have a pending payout of over $3900. Even taking into account the exchange rate of about 0.25 USD/Steem, that is a good pay for writing articles.

So I wonder - what's the catch? What is Steem and Steemit all about? Is the platform really paying people hundreds of dollars to post articles, or is there something fishy going on?