Here is my admittedly brusque response: in a potential audience that barely cracks four digits, if that, does it really matter if your "best" short story, novella, novel, or "fanzine" activity garners any awards consideration? Unless it leads to multiple reprints due directly to appearing on some ballot, I suspect the short fiction writers get very little immediate tangible benefit from being up for Award X or Y. And certainly those who want to be viewed as "fan writers" will see no increase in income from getting at best a few hundred people voting them the gold star.
So why do some care beyond the simple gratification of knowing that someone liked his/her work? I've heard of some in the past nominating me (why, I really can't fathom, since I've eschewed the "fan" label for years), but outside of a quick "well, that's nice that they liked my writing," it's never meant anything to me. After all, who really can recite off the tops of their heads the previous decade's worth of Hugo or Nebula winners in categories other than Best Novel (and even that would be difficult for many to do; I can barely remember last year's winners).
Yet despite there being very little to no "bump" from nominations (with the possible exception of the Hugo Best Novel winner, but even that would be modest in comparison to other prizes), there seems to be a much more overt jockeying for kudos from SF/F quarters than from other, larger literary genres. Three big English-language literary prizes, the Booker Prize (UK/Commonwealth until this year), the National Book Awards (US), and the National Book Critics Circle Awards (US), receive much more media coverage. Perhaps some of it is due to the members-only (NBCC) or juried awards (NBA, Booker), but I have seen nary a pitch from publisher, author, or others for such and such to be nominated/win any of these awards (yes, I'm aware that behind the scenes, outside the purview of blogs and other social media, that this often takes place). Yet the rewards are much greater here; some of the finalists/winners see tens, if not hundreds, of thousands of books sold as a direct result (more so for the Booker Prize than for the two American ones I listed; the Pulitzers certainly would have a great impact on sales, but they don't release a shortlist prior to naming a winner).
There is no open battle for attention; attention is drawn after the release of these long/shortlists. The economics of scale are different, as instead of the market being oriented around smaller-scale releases, for the literary prize finalists, the expectations are for a magnitude or two greater of sales to occur. Of course, the literary cultures are different, with SF/F having a far more blurred line between reader and writer, between consumer and producer of content. Yet I cannot help but feel that SF/F awards season is more akin to a school of fish in a fish tank swimming frantically toward a limited, paltry portion of food than any other metaphor that comes to mind. To someone like myself who reads several genres of work, it is fascinating in a way similar to why many people watch reality TV: the rubbernecking after the trainwreck just witnessed is too difficult to pry yourself away from immediately. But even knowing this, these frenzies shall continue every SF/F award cycle. Time to see which feast and which starve.