Batoning is currently popular IMO for a number of reasons. One is that the technology the last several years (the growth of sites like YouTube that make it easy to post free videos, the growth of easy video-capture equipment like cheap digital cameras, etc.) has made it easier to spread these ideas. Perhaps many people in the past wouldn't have used their knives this way, but the idea has caught on rapidly due to the technology spreading the idea. Folks like NutnFancy just happened to be some of the first to get on board with these new technologies, so the "first guys in" always become the most well known. Another reason I think batoning has become popular is, it's a good and accessible way to test a field, all-purpose, or survival knife for overall toughness beyond just basic slicing performance. It's not a hard test to perform and almost anybody can do it. Even if I don't plan to do a lot of batoning, for a knife that I want to use for field or survival bag use, it IS one good test of overall strength and performance. A third reason I think is the growth of interest in survivalism, and techniques related to it. Perhaps in pre-survivalist days, most folks would just bring along the 'ideal' tools for a job normally (a saw, an axe, a machete, etc.). Now, there's a lot of interest out there in minimalism, trying to find the "one tool" that is lightweight and that you can make serve for many purposes. Hence, the idea of a survival knife that can chop, split, pry, hack, slice, etc. etc.
Setting aside all those other reasons, is batoning a "good" thing? Answer: it depends on your intended purpose and use of the knife. Here's an easy example. I have a 4.5" stainless fixed Doug Ritter knife (made by Benchmade, based on the old fixed Griptilian design). Great all-purpose field and camp knife. However, not that great for survival use at only 0.140" thick. You CAN baton with it, and Doug has in his testing, but I plan not to unless it's a last resort. I have a saw and a large chopper (a Junglas) I can bring along for those tasks, so I'm not going to abuse this nice knife (which cost $150) in this way. But now, consider another knife. I'm planning to buy another blade in the 4" to 6" range, a carbon steel "tough" blade that can go in my bug-out bag. This blade is something that, if there's a regional disaster in my area (most typical would be an earthquake or active volcano event), would be in my 'get-home' bag from work. It would need to make do for all cutting/chopping/prying purposes, so batoning is a good test for it. When I finally decide on and buy this blade (say an ESEE 5 or 6, or a Swamp Rat Ratmandu), I definitely intend to baton with it, as a way of testing the blade's strength for survival situations, and improving my skills at making fires when I don't have all the ideal tools (like an axe) on hand.
So, I think there's a lot of complex reasons why 'batoning' has become so popular. Yes some people get carried away with it and hence you have knowledgeable knife and survival guys like Jeff Randall who laugh about the "gay baton fanboys" and so forth. The general consensus of these guys is that this batoning thing has gone WAY overboard and people should be using the right tools for the job, and not abusing knives that were not designed for splitting wood. In general, that's good advice and I agree whole-heartedly. I have an assortment of hatchet, camp axe, folding Silky Saw, Condor Golok machete, and an ESEE Junglas, and at times, all of these can be the ideal tool for the job at hand.
But that said, the catch is that you can't always have the "ideal tool" with you. So, I still think there's a LIMITED but important place for batoning among knife owners. It's a good skill to have if you care about being prepared for survival situations (as part of your fire-making skills), and it's also a great test of a hard-use knife that you would want to be able to use for all tasks in a survival situation, or if you are a minimalist backpacker (this is another growing movement) who wants to get by with a minimum lightweight set of gear.
So my take is: batoning is ok, yes you can get too carried away with it and try to do it with knives that weren't designed for it, but it IS a useful skill to have and with a hard-use or do-all survival knife, it's a legitimate thing to do.