[TheDopp]

It's even funnier because it's a first person shooter. So you only see your hats 1. When you taunt 2. During humiliation 3. Use bonk

Well, a large chunk is about OTHER people seeing what's on your head and getting them to be impressed/interested/grab their attention, etc.

In the original cannon of the Star Trek universe, Kirk beat the kobayashi maru by programming it so that he had a reputation. That the entire galaxy knew he was the most badass captain ever, and not to be fucked with. (the logic being, and why he got away with it, is because he had planned on having that kind of reputation when he captain'd a ship)
For some, hats/Unusuals are the same thing when they play on the same server often. Nothing as satisfying as watching a medic pop an uber when you walk into a room because they know if they don't they're going to die, all because they recognized you by your hat.