It's to attract the players. If the negative house edge increases the return across your park of machines, and it's legal (e.g. this is illegal in France), you do it.

Poker is not a solved game, in the game theory sense. So, what does it mean to "play perfectly"? Do you mean blackjack instead of poker?

Video Poker is basically solved, i.e. for this type of video poker game, use this strategy for a return of 100.76%.

http://wizardofodds.com/games/video-poker/

Do casinos still use machines that play this variation? Are the machines fair (eg do you have an advantage using this strategy)?

I saw several at the Atlantis in Reno less than a year ago. You do have an advantage, and most of the places they exist they're prominently marked. There are generally only a few, and they're often not played much - perhaps because they also don't pay out rewards points.

Some smaller casinos in Nevada offer one or two +ev VP machines on the floor

Video poker has been solved.