The Open Directory was created a long, long time ago, with the intention to essentially to be a leading search engine on its own merit. Instead of hiring editors to maintain the database they use "volunteers" that approve listings, edit titles and descriptiones etc. This "open" system worked well for a while and everyone was super horny to get a good ranking from the ODP.
The Open Directory evolved into DMOZ a few years later and ultimately was taken over by Google to act as a sort of Directory option in search, similar to Yahoo. Well, this concept didn't work out very well at all because of the amount of control the "volunteer editors" had over positioning one web site better than another. Because of the human influence on search results, the project became corrupted. Rumours were circulating that "ODP editors" were accepting bribes by eager web site owners (especially in competitive keyphrase arenas) and ultimately some of these cases were proven. DMOZ (the old ODP) lost a bunch of credibility but Google stuck with it and put it on the back burner; but never has fully disengaged it.
Nowadays the ODP is a big joke, a big fat useless joke that somehow survives, who knows how and who knows why.