“Why do people do it?” is a simple question to answer. They do it because it is so often so effective at shutting up the target, regardless of the truth of the allegations. And in some cases and groups the “cult of personality” helps this stuff gain momentum to boost the leaders’ popularity. (Both Democrats and Republicans frequently use these tactics, for example. Not all Democrats and not all Republicans, I hasten to add—I don’t want to be accused of that kind of thing myself.)
And we’re all victims, unfortunately, either directly or indirectly—even those who sign onto this form of abuse. That is to say, facts are true regardless of “spin”, obfuscation and prevarication, and attempting to deny, cover up or “pretend away” truth by lying just stops us from knowing the world better as it really is. That applies to people, too. If I believe that you’re a no-good so-and-so because of various lies that have been spread about you, then it prevents me from knowing the real you—and I apparently believe things about the world that aren’t so.
Targets of this kind of abuse can eventually have their reputations restored, but too often that restoration is posthumous.