How do people make money through blogging?

Since I began to take this course, there’s a big question mark hanging in my head – how can we make money through blogging? I have been writing a blog for years, but I feel like I’m constantly talking to myself. I used to think people love blogging just because they don’t have real social life and they want to find another channel to complain about things. Well, maybe some people do. But recently I realised there are some clever people making huge amount of money by writing blogs at home. So with the hope I can do something like that in future, I dig a bit further with great interest (towards money), and find out those clever people are mainly generating profits through several streams that some of us are already familiar with.
Most professional bloggers make money through advertising. There’s not much difference between the advertisements on blogs and those on portal websites. You just need to copy some codes to your page. Then every time a person clicks an ad, you get paid. But usually the payment is very low, say less than one US dollar per click. And sometimes, you have to reach a certain amount of money in total every month to receive your payment. The most widely used advertisements nowadays seem to be Google AdSense.
Moreover, bloggers can also make money from writing reviews and recommendations for certain products. The niche of the products they write about should match the readerships of their blogs.
There’s an article written by Steve Pavlina, who makes more than US$1000 every day from his self-development blog. He explained the whole topic pretty comprehensively. But the length of the article (over 7000 words! ) contradicts to what we have learnt in class. You need enormous patience to make it to the end of the article. There’s also a much shorter piece published on DoshDosh. The writer listed out the pros and cons of several money making strategies. I also found a piece teaching people how to make money on Twitter.
Anyway, either you want to make money from advertisement or affiliated products, you have to attract enough traffic for your blog. So it all comes down to how to attract readers online. There’s a super-clever guy named John Chow who makes more than US$40,000 every month from his blog. He started a link-exchange program - every time people published a review about his blog, he would add the link of your blog on his blog. At the end of the program, his blog became the first result would appear on Google when you searched ‘make money online’. He also organised many activities offline so that readers of his blogs could meet up in real life. Once you get closer to your readers, you will receive more reviews hence more traffic.
There’s much more to be explored about making money through blogging. What do you think? How do you want to generate profit through your blog? Or have you heard of any interesting idea about promoting your blog online?