Masternodes are computers that run a dash wallet and make decisions, such as locking transactions with InstantSend, coordinate mixing of coins, and voting on budget funding.
Masternodes are required to have 1000 Dash collateral, a dedicated IP address, and be able to run 24 hours a day without a more than a 1 hr connection loss. Masternodes get paid 45% of the block reward on every block, which is distributed to masternodes one at a time. Typically, around 2 dash is paid to each masternode every 7 days.
Masternodes cost money and effort to host so they are paid a share of the block reward to incentivize them. With current masternode numbers and rewards masternodes earn approximately a 11% return on 1000 Dash for the year of 2016. This reward falls off in subsequent years but as the value of Dash is rising and the supply of Dash goes down, masternodes should still be sufficiently incentivized. This projection also doesn’t count the fees that masternodes earn whenever someone uses its services (InstantSend and PrivateSend).