It's no different from a coffee shop providing an open WiFi, or an ISP providing you with a fiber connection. What people do on it is their problem, not yours. Their web traffic is wrapped in another layer of HTTPS, not in plaintext you can read. Most traffic is not criminal traffic, you're not any more likely to be the exit node for a criminal than you are to purchase something from a criminal in real life. That waitress you just tipped at the restaurant? Might've been a murderer. In either case, you don't know that you've dealt with a criminal. You providing the exit node is like a transaction: you're "paying" for the VPN service by helping run the service.

The point of all this is to make it so that governments can't pin down the IP of any client without expending significant resources. It makes mass surveillance, control, and prosecution prohibitively expensive. Law enforcement would still be able to trace suspects through the hops with their rich arsenal of backdoors, exploits, and clues in the physical world, just not without significant effort and therefore expenses. So they will only be able to pursue criminals in a targeted manner, which is how law enforcement in a free society is supposed to work.

The decentralized VPN service can only work if clients are also servers, otherwise there will be too many people who use the service without contributing to it, resulting in a tragedy of the commons.