I know a few people who sell through etsy - from what I can see, they get a decent amount of free traffic from etsy, but only if they are active on the site - I'm not sure how that works, that's just how they've told me it works. The big problem is that a lot of art or crafts are very labor intensive - the one person I know who sells stuff on etsy full time has the production process down to a science, selling to a very targeted set of keyword (since selling paintings or photos etc is very over saturated).
I know some craftsman who have offline businesses - handmade furniture, stained glass, or selling lumber to cabinetmakers. In some cases, it seems like a huge piece of the value of what they sell is the customer service aspect. One the other hand, most of the people I know are terrible at sales and marketing, and want nothing to do with it, so if you find people who are able to sell their work offline, you probably can sell their work online (provided it is something that can be shipped, i.e. my stained glass example is a tough one there)