What is the point of the red envelopes?

There is an option to buy gems for others this way. That would be down to the generosity of others. Perhaps if you are an alliance leader and want to reward your members for helping in events. If you have the money of course.

In general red envelopes drop when players reach certain base level milestones. These are given out by the game itself for free.

Yup you also get this when someone completes a milestone such as reaching lv 20.