My tiny companies have been selling online for over 2 decades, so what I've picked up along the way:
frowned on by smaller developers because they often don't make any money from grey market purchases
That's probably not the case, less so as the dev increases hir inventory of games. There are follow-on and spread-the-word dynamics which can go on and increase overall sales over time. So short-term loss for long-term gain.
I don't understand why some old games are put on sale, and then put back to full price
Some people—like me—won't touch a game unless it's on sale. You gotta put it back to a higher price of course to be able to put it on sale again.
Retailers also run their own promos all the time, and invite submissions from suppliers—those products will auto-drop for the duration and auto-return afterwards.
why are games like Death Stranding being offered free?
That's fairly unusual and mainly due to a very deep pocket player wanting to enter and gain market share in the game retailing business. It's a multi-year plan, big losses now for big gains later.
Games like Death Stranding are called 'marquee products', designed as occasional attention getters to capture a new swathe of potential future customers.
This strategy by Epic isn't weird from a business POV. What are the alternatives?
♣ Buy up a load of small retailers and try to weld them together into a mass to challenge Steam and MS—nightmare imo, and still too small even if not a disaster.
♦ Run huge advertising campaigns for many years—I prefer they're spending the billions within the gaming community.
gaming companies will always try to maximise profits and have well tested marketing strategies
There are also lots of group think and unfounded 'theories' which can be at play.
♣ All my research has shown that DRM decreases sales.
♦ Piracy isn't always bad, has been shown to increase sales overall long-term in some cases. However, the mindset against it is so cemented that there isn't enough evidence yet to draw reliable conclusions.
Those aside, you are right that their strategies will usually be well-tested and reliable.