Could you explain me this contractor thing?

I'm having hard time to understand why US has so many people doing contractor networking stuff...

Reading /r/networking I see that there are lot's of people doing contractor work, many of which are contracted (correct term?) to the same position for a long time. I even see 'CCNA level' guys talking about contractor jobs.

Here in northern Europe we got consultants to do a single task, but if we need a networking guy for a longer period of time we hire one. Though we sometimes use guys from recruitment agencies where we pay the agency and then the agency pays the guy the usual salary he would get in a regular job too. Would this count as a contractor job? In this case it's usually for few month a time and there's usually a very little notice to end this kind of contract.

What's the catch here, why do so many even entry level guys are doing contractor work? Couldn't you just hire a guy for a lot cheaper? From what I understood you can kick the guy there with a like days notice, compared to northern Europe where it is really difficult to get rid of an employee just because you feel like it.

It's really an honest question I just want to understand how it works there, I'm not saying one way would be better than the other.

Thanks!