From the publishers point of view, the main purpose of ePub is to provide a single source format for their ebooks. Many UK publishers are ePub only, and now at least some US publishers are following suit.
On EInk Readers, ePub is now the dominant DRMed format, with the Amazon Kindle as the lone hold out. So ePub capable EInk Readers are seeing these ebooks exactly as the publisher intended, but the Kindle is seeing a version created by Amazon from the original ePub. On the other hand, the Kindle is a large fraction of the total market.
For confirmation that Amazon is accepting ePubs directly from publishers, see
Pablo Defendini's post to his own Wheel of Time eBook Publishing Schedule:
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Unfortunately, since Amazon handles the conversion from our source file (an ePub file, which is the de-facto open standard for ebooks, as opposed to their proprietary Kindle format) internally, after we hand them our file, the quality on Kindle editions leaves much to be desired (it's an automated process within Amazon, so we don't get to peek into that black box, much less get oversight once the file comes out the other end, before it's made available for sale). As a result, things like the maps, the formatting and such, that look great on all the other e-editions of the books, look bad or don't show up on the Kindle edition. For example, maps don't show on the Kindle sometimes, there is no table of contents, and drop caps look like Artanian's first letter on its own line. By all means, complain to Amazon. They listen to their customers much, much more than they listen to publishers, actually.
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Note that it is already common for a publisher to provide a single ebook format to its ebook distributors, with the distributors doing the conversion to other formats. What is new is the use of ePub as the initial format, and also a (laudable) refusal to dumb down the initial ebook to the lowest common denominator of all the target formats.
I have attached screenshots from the ePub version of The Eye of the World displayed by Sony's Windows ebook Library. This includes maps and each chapter's text starts with a dropcap. In the Kindle version the maps are missing and the first letter of each chapter is normal size on a line of its own. The initial cause for these issues is that ePub is a newer, more capable and feature rich format, than MOBI (AZW). MOBI simply does not support SVG graphics and drop caps. However, if you ran this ePub through Calibre you would get a much better MOBI that Amazon is selling. Calibre can convert SVG graphics to JPEGs and it recognizes drop caps and does not make them into orphans. The problem is that Amazon is using MobiPocket's ePub to MOBI converter for this task and it isn't up to the job. This isn't surprising, since Amazon has starved MobiPocket of resources.
In my view, Amazon needs to get its act together for ePubs. The best approach for consumers would be for the Kindle to add ePub to AZW and TOPAZ as a third fully supported format. This would be entirely consistent with Amazon's delivery model (they already have two formats after all), but this gets harder to do the more kinds of supported system types (iPhone, Windows, etcetera) get added. I think it is now clear that Amazon has decided not to do this, since the international Kindle was the obvious time to do so. A "good enough" approach would be to do a Calibre-quality transfer from ePub to AZW, and over time augment to AZW format to make it less MOBI compatible and more ePub like. I don't see any evidence that they intend to do this, since Calibre has been producing better MOBIs than MobiPocket for quite a while and Amazon has not either switched to Calibre or improved their own (i.e. MobiPocket's) converter. What I think they are doing is using their market position to try to get publishers to dumb down their ePubs. If all the ePubs produced are just MOBI clones, then Amazon has no need to do anything beyond what they are doing now. So far the pressure appears to be passive - publishers give Amazon good ePubs and get back crappy AZWs and if a reader complains I'm sure what Amazon says is that they will pass the complaint to the publisher (they don't say that the fault is in any way theirs). I don't think this strategy will succeed, but it is very damaging in the short term.