MLOs are custom interiors. On FiveM specifically, they work differently from single-player - they're shipped by the server, downloaded by the client, and managed by the framework rather than by the player's local install.
This page explains the distinction. For the broader concept, see the MLO glossary.
How FiveM ships MLOs
When you connect to a FiveM server, the framework downloads the server's resource bundle - including any custom MLOs the server uses - and loads them into your client. You don't install MLOs yourself; the server does it implicitly.
This is why FiveM RP servers can ship dozens of MLOs without each player needing to manage installations. The friction is on the server admin's side, not the player's.
Why FiveM dominates the MLO market
Two reasons. First, install friction - single-player MLO installation is fiddly and breaks easily. FiveM's automatic distribution removes that friction. Second, demand - RP servers need lots of custom interiors, and the demand drives a marketplace.
By 2022 onward, the great majority of new MLO development was FiveM-targeted. Single-player MLOs continue to exist but are a much smaller scene.