You are just guessing. Look into it more. They are put up in places that are pretty decent for homeless shelters. They're usually cheap hotels, so you get your own room but no kitchen. It's not somewhere you want to live, but it's 100x better than a train station.
Most homeless people are fine in them, but they have security watching the door so you can't have a party, you can't have pets, and you can't have drugs. Maybe you can't smoke. Some people don't want to live under those conditions. Other people have mental illness and don't want to be in any shelter.