What exactly does karma do?
It is an attempt to allow posters to wear their reputations on their sleeves. If a particularly poster is an all around cool person, he or she would theoretically have a pretty high positive karma. Likewise, some asshole that manages to just skirt getting banned, would supposedly have high negative karma. It is meant to give newbies and other people unfamiliar with a particular poster some idea of that poster’s credibility.
That’s the theory, anyway. But, as has been pointed out, actual practice generally results in easily gameable popularity contests.