I guess the Bills see his value in the versatility it gives their offense to do anything they want. With 1 TE on the field they are 8th in passing efficiency, with 2 TE's they are 3rd and with 3 TE's they are 1st.
A large part of our success is having 3 TE's that have dual capabilities so that even in run heavy formations we can actually come out and be successful passing because we have created mismatches with the defense having to bring in bigger, slower, less athletic players to stop the run.
Now, I am not saying that to defend his contract, it's still absurd, but at least that gets to why they are OK with it right now.
Also, is it not strange that the Bills existed for so long without even a single good TE on the roster and now they have 3 of them?