Let's be clear about the KDP select programme.
There are 2 levels that you can use in KDP Select.
Level 1. You agree that Amazon Kindle has exclusive rights to your title and enter the programme. Amazon buyers who are prime members can download one book per month for free. As a publisher you hope that amazon prime members choose your title as their free download for the month.
In return you will get a cut of the KDP Select pot. In the first month authors recieved around $1.70 for each "Borrow". The pot for December was $500,000, January was $700,000. The current month of february is $600,000.
Amazon are monitoring the system constantly to ensure that it is equitable for authors and prime members. Their motivation is to enrol more Prime members.
Level 2. Once in the KDP select programme you can promote your book by making it free to all kindle owners for up to 5 days for every 90 days. These free downloads are listed as sales in the Kindle stats but you will not be paid for any of these "Sales". What will happen is that your book will see huge download numbers for the "Free" days. After the free period you will see an increase in paid sales. For some titles this increased revenue will be sustained. For others the sales will drop off after a week or so.
So why would you "Sell" your book for free.
1. Your book will enter the top 100 titles in the free listings. This gives it more exposure.
2. Amazon are looking at the download numbers and will rank your book in the light of these "Free" sales.
3. In the week following the free download days you will sell copies and get onto the "Customers who bought this" Listings. One of my titles has many books linked to it as a "Customer Also Bought" title. This is the key to regular sustained sales.
None of this is an exact science. Amazon are very coy about their stats and processes. But many authors are seeing great results by publishing on the Kindle platform.