It seems they're either for server stress testing or limited demos. That's how it seems to have gotten today, though they do involve some beta testing as well (reporting bugs etc.). Anyway, they're often too late to make a difference.

The problem is that lots of people are talking about public betas. There are still private betas that happen months before release. As was recently confirmed, the KZ2 beta was just sent out to people a few weeks ago, and that game comes out in February.

There are betas that come out later, and I fully expect a KZ2 beta by the end of the year, up until launch, which will most likely be the open public beta. But LBP had the same thing, the beta was going on months before the recent public beta happened.

Er yeah, forgot to clarify-- I'm talking about those huge public betas.  There are betas that are actual betas like WoW:WotLK but the ones like the R2 , Halo 3, and LBP betas are just hyped demos. 

How cool is it to tell people that you got into the beta? 

How cool is it to say I played the demo?

Back in the day, when PC games moved more and more towards multiplayer games and had a need to balance games. Because of how many people were required to beta test these games, this meant that more and more people were getting access to early builds of games. An (unfortunate) problem occured, and many people were starting to review/judge games based on their betas and word of mouth (positive and negative) would spread about games. It soon became very important to push off beta tests until games were closer and closer to being completely polished which resulted in the beta test being less valueable to the company because less content could be changed before releasing the game.

With the exception of massively multiplayer closed-betas, most beta tests are really not that far removed from the game that will be released and are only used to tweek small values and minor gameplay elements. As a result they're not quite demos but they are not that far from them either.