where do resellers get their packages to resell to me to resell?

Really now, there must be a secret stash or arrangments for resellers selling to -resellers, small stores etc.--- because buying full perm retail items at say 5-9 Lindens as i do on occasion, Haev got to be even less somehow?
Or are they actually only making 1-2 lindens a sale?

Just real curous how this is working. And who actually supplies all the freebies in the first place?

The "Freebies" usually come from one or more of several sources.
1. Stolen/perms changed through a bug etc.
2. genuine freebies exploited .. i.e meant to be free to all but sold for profit.
3. Linden built items .. as 2.

Yes I s'pose they sleep at night.
I coud'nt.

As time passes, you'll find that most all of the resale freebies have been the same ones available for years and are rarely ever updated at all. Even Yadni's Freebies hasn't had any real new inventory since last November. (=_=)y

It's not uncommon for creators who resell to also make their own freebies as an enticement or example of their abilities. Not all freebies are the same recycled aged items. You might want to try your hand at making some freebies yourself -- something similar to what you're already selling or something that will work in concert with what you're selling.

For myself, I sell Japanese inspired creations (furniture etc.), but had some nice more Goth oriented textures I wanted to use. So I created a Goth furniture suite as a freebie. Not something that fits within the theme of what I'd sell, but some of my customers (or browsers) might actually like it.

Freebie making can be fun!