Many ex-players do not become referees as they don't want the physical grind that goes with it. The full time NRL Referees squad train as often as the players do, and but whilst the players do weights, ball work and cardio sessions, the referees training is mostly cardio work and it is not easy. They proverbially whip you physically. A referee runs more metres per game than any player does as they are expected to be up with the play at all times. Hence very few ex-players want that level of grind.
As to why, it is highly personal. I went into it as I loved league but I was too old by the time I wanted to go into it to become a player, I was 23 at the time so I took up refereeing. I started doing Under 7s - Under 9s (we didn't have Under 6's when I started) but it was not long before I'd moved to doing U/10s thru to U/16s. In my junior league (Parramatta) you would often do 3-4 games on Saturdays (which is when the U/7s-U/15s would play) as a referee (you have volunteers as touch judges for those games as there are not enough referees to also provide touch judges due to the sheer number of game) and on Sunday you would referee 1 game and then be a touch judge in another 2-3 games (as this is when the U/16s to A Grade games would be played).
Some people become referees as they want to put something back in. Some because they played the game at junior level but weren't quite good enough. Others because a parent or sibiling did. Yes some because they are predisposed to being authority figures.
One thing all referees are aware of is that from when the player enters the "playing area", they are under his/her control. Enforcing the rules and getting the teams to play football(as opposed to say brawling/sledging each other) is part of their job. Hence if they do not do so, they will be marked poorly by their appointments board which will effect the game they get the following week and ultimately whether they are classified as "good enough" to referee during their competition's final series.
