.co is the Internet country code top- level domain (ccTLD) assigned to Colombia and The domain name .com is a top-level domain (TLD) in the Domain Name System of the Internet. Its name is derived from the word commercial.
Perhaps they're going for typo traffic ..imagine buying big brands or dictionary words like sex.co (imagine how many people are entering that in and mistyping). The traffic on some words would be huge.
I think there is a down side to country codes too.
.ru for example. It is the Russian country domain but 75% of spammers that I have blocked from my 5 domains have come from email addresses with the @mail.ru suffix.
Having domains that a lot of people are not familiar with can also result in mass blacklisting not only from webmasters, but also from email recipients.
I have 5 .org domains which are used for non profit purposes. I have recently registered a .cc domain for my own purposes for a tourism site.
I thought since it was free I would see how accurate my perception of these short domains can be. So many people I fear do not give them credibility.
I have never thought of .co as a short form of .com, but then I haven't really given it much thought. When I see it I think about free/cheap domains, probably because of co.cc I guess? but that's not even a TLD. I would prefer .com before .co every day of the week.