Why are BMX saddles so low? I've seen a lot of teenagers riding BMX bikes recently.

It seems that most if not all of the guys I've seen riding their BMX bikes around the streets, car parks, local parks, etc have a frame that's really small, and a saddle that's as low as possible.  It looks like the rider's knees are above their waists for much if not most of their stroke.

One of the local parks has a dedicated BMX track with actual racing taking place on it.  When I watch those guys they never seem to have their saddles all the way to the bottom.  

The thought occurred that it might have something to do with trick riding but none of the kids with bikes set up like this seemed to actually be doing tricks. They'd just be riding the bikes normally or even just sitting on them outside shops. Their bikes also didn't seem to be set up with trick riding in mind, most of them didn't have those bar things projecting from the wheel hubs for the riders to stand on.

Is this really low saddle something they're doing to be cool? Or are there some real tangible advantages to this seating position?
Low seats provide clearance for more acrobatic body movements. This is essential for bunny hops and nearly every other trick which builds off of this skill. If you look at trials bikes they similarly have lots of clearance for the rider over the frame and the saddle. Since speeds are relatively low, and long distance riding is not the goal, pedaling efficiencies gained by a higher seat position are much less of a priority than vertical maneuverability. 

As per Daniel R Hick's comment BMX bikes are also commonly used for children's bike's as they are easy to learn on because of the low seat. 

In this case fashion follows function. Just because the particular riders you see aren't tricking doesn't mean there isn't a valid functional reason for this kind of setup.