Homelessness looks different depending on your country. In Japan for instance it's not hostels but internet cafes that host the majority of the homeless population. Basically those cafes were designed to give young people places to play games, surf the web and so on outside of the family home but because a lot of them had complimentary drinks, showers and whatnot they basically became nightly accommodation where a single night cost about the same as a decent meal you ended up with a place for a transient population of casual under employed workers to stay.
A lot of people in that situation face massive precarity. They live day to day keeping with very few personal possessions and tend to work jobs that are exploitative or dangerous because employers basically know they are in trouble and use that as leverage. An injury or illness can quickly cause you to fall into sleeping rough and become quickly life threatening because safety nets are few and far in between and if you can't look clean your ability to self support becomes less likely.
That particular death spiral exists all over just in different forms. In the US it's more likely to involve living out of a car. In Europe hostels intended on paper for backpackers but the basics are that once you start legitimately looking shabby and unclean to other people the empathy dries up so you need to do whatever you can to keep your head above that water because recovery past that point gets very very hard.