The idea is to delegate responsibility of paying for infrastructure resources (SMS) from the developer to the user. At $5/mo for 160 messages, that's roughly what you would be pay using Twilio directly at 3 cents a message. The unused texts do count as profit, but most of my other services are free so I'm hoping this might help support them.

N.B. Despite the title, submitter is did not build the app; this guy did: https://hackernews.hn/user?id=progrium

So developers pay this guy to use an API that wraps the functionality of another free API and then charge them for it?

According to the video, it's not a free API; it's 3 cents per message.

See also: http://www.twilio.com/pricing-signup

Touche. But if hes charging for a similar service (where there is obviously a margin), unless his API is easier to use the value added doesn't immediately jump out at me.