This. In my experience, you have to replace peer review with reputation for preprints. That's highly imperfect, and it tends to lead to dismissing of good but work by less well-known researchers as "not peer reviewed", while well-known researchers (or researchers at well-known institutions) basically get a fast track to citations.

Despite the imperfections, I found arXiv indispensable for my research. In particular, mathematics has a slow peer review cycle (it's hard to read and understand, and many referees require that they fully understand a paper to accept it, which imo is a little flawed, but that's the culture). I had several papers that were under review for more than a year (single journal, only one round of revisions), and arXiv was my only showcase. Both works ended up very highly cited, but publication delays would have been an even bigger problem if arXiv wasn't there.

they also keep the papers as a pre-edited, free version of the peer reviewed equivalent