I think people bully for any number of reasons. I think it can be a learned behavior based on how they are raised. I.e. if parents gave into their demands when they were being very pushy, it could manifest into bullying in adolescence. If a father bullies his mother and gets his way, it could be learned that way too.
I also think that some kids who are bullies have lives that are out of control and they bully as a form of being able to "control" something. They know if they threaten and the other kids wimpers, they caused it and can do it again and again.
They are also insecurity and think this is the only way to get attention of "respect/ fear" from anyone. Bullies are often very frightened people who are acting out to cover up their fear. In some people this manifests itself in humor. Humor is what distracts themselves from feeling victimized although they are victimized nonetheless.
In growing up, I witnessed many times that the bullier and bullied grew to be friends as they were older. It always seemed odd but it happened and evolved into a "normal" relationship.
The unfortunate thing is when the bullied are pushed beyond what they see as the brink and bring themselves to hurt themselves. It is those times that I hope i have good communication with my son so that if he is ever having trouble, he can talk it through with me and not think he is all alone in his plight. This stands true if he were the bully too as I would do anything I could to help him find the root of his insecurities and not take them out on others.