It's networking, and it in NO WAY means that the person is unqualified.
Example? I graduated with my BSN, great GPA, great clinical recs, passed NCLEX first try with 75 questions, good to go for a job, right? Except there were so few places that would even consider hiring new grads, let alone postings that encouraged new grads to apply, that there were hundreds of applications for each position. I was very qualified, but couldn't get anyone to look at my app. After about 150 rejections (literally), I begged every person I knew in a healthcare facility back home (I had to relocate post graduation) to tell me if they had any connection to a facility in my new area. Long story short, I found someone to put in a good word for me, and finally my resume was looked at, I landed and interview, and am now working as a RN on the unit. Don't get me wrong, the recommendation got them to look at my resume, but I am the reason I got the job.
Competition is FIERCE for jobs, or at least it was a year ago. Grades and recommendations aren't enough when you are lost in a sea of jobless new grads all clammoring for the same few positions. It's no different than someone getting a job as a CNA just to get their foot in the door at a facility. You have to use whatever you can in this economy.