At its core, the game is basically a hack-and-slash dungeon crawler. And it's actually pretty good at it. It's got secret areas, loot, collectibles, and the level design is solid. Aside from that, the specific appeal is:
1) Local Co-op! This is HUGE for a lot of people. Games with local co-op and RPG-like progression are rare nowadays, so any game that has this type of gameplay and has good, solid gameplay (which Skylanders does) is bound to attract an audience
2) Kid-friendly. The graphics and pacing of the game are meant to appeal to kids, without alienating adults. Thus, Nintendo-like, the game can be enjoyed by any age group that doesn't mind slightly cartoony presentation.
3) The Pokemon effect. Skylanders has the same catch-em-all/play your favorites appeal that Pokemon does. Some people want to collect every one, some only want to play the ones that "look cool". The game lets you do both.
4) "Physical DLC" is a good way to soften the blow. I do think that the figures are overpriced, and I think it's cheap how you NEED to buy every single one to get 100% in the game, psycologically getting a physical object makes it a little easier to swallow. Unlike Pokemon, you can do things with your collection outside of the game. You can display them, use them like regular action figures, or use them in the web game. And while your SFxTekken character may not work when the servers go off-line, I'll always be able to use my Camo.