I can still hear them chanting "Cambio, cambio, cambio" and it's been a few years. ATMs give hardly anything and charge a large fee per transaction as well, so it's no surprise people go to arbolitos.
You'd also get a better exchange rate from the arbolitos vs the ATMs.
If I remember correctly, it was referred to as the "black rate". If you paid a vendor in USD directly, you got the "blue rate". Both of which were much better rates than the ATM.
Instead people who need to exchange regularly go to "cuevas" (caves) which are just hidden and illegal currency exchanges that have much more volume.