That's right, the people who are selling below vendor price are your gold farmers. The reason why they do this instead of selling it to vendor themselves is prevent massive inflation. Of course the inflation could occur from normal players selling their materials to vendors, which they do, however, a normal player partakes in pve or pvp activities which case causes gold to leave the economy where as a gold farmer is constantly creating gold with none to very little of it leaving the economy.
So why would they sell their goods on the auction house below vendor price? Well like players, gold farmers also have a vest interest for in-game currency to be valuable. If, let's say, twenty in-game gold coins was sold for twenty US dollars today and were capable of buying the average player X items, but after a few weeks of inflation, it now takes forty gold coins to purchase those same number of X items then the value of in-game gold has gone down. This means gold farmers will have to spend more time farming a total of forty in-game gold coins to sell it for the same price of twenty US dollars.
Therefore, to prevent inflation from growing rapidly gold farmers, rather than selling their goods to NPC vendors and create additional money within the game, they will instead sell their goods on the auction house well below market and even vendor price. Also since gold farmers are running automatic bot programs twenty-four hours and seven days a week it not unlikely for the items on the auction house to temporarily dip below vendor price, because as we all know an over abundance of supply will drive prices down.
So like the average MMO player, gold farmers (and perhaps not all of them) rather have money be exchanged from player to player than to create new and additional money causing inflation, because no matter what you may hear other people say, rising prices is certainly not a good thing.