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The government tried collecting the taxes, and the owners did not (perhaps because they could not) pay. So the government auctions off the house to make good on the debt.

What else could the government do, put the homeowner in debtor's prison?

It auctions the lien, not the house. The new lien holder then foreclosures on the house and takes all the remaining equity.

You are correct, they buy the lien and have to foreclose later.

I'm still curious what myname would propose as an alternative collection scheme. The article mentions that Michigan stopped doing tax lien sales, so I checked up on what they do now: https://www.tax-sale.info/html/index/page/general

SPOILER: > The properties are then sold by deed at auction.

Not much of an improvement over the lien process; just a faster foreclosure.

In some places they would garnish the debtors income.

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