While some of the Chancellors had a better ability than he, being able to immediately make your opponent lose 3 life and gain 3 life is a really useful ability. Starting the game at 23 while your opponent starts at 17 is a useful weapon to have. Yes, Chancellor of the Dross does have triple-black in his mana cost, but in Limited, you'd be playing bunch of Black cards anyway if he's one of your first picks anyway.
In a 40-card Limited deck, the chances of having him in your opening hand are pretty good. So it's pretty much worth running him in the off-chance you have him in your opening grip, because even if you don't, you'll have access to a powerful beater in the late game. But in regular 60-card Constructed, the chances aren't so good. It's not worth running 4 copies in the rare chance that you'll be able to gain 12 life and make your opponent start at 8.
In EDH, he can be a fun guy, though. This is because his ability targets each opponent, and not just one opponent. He's also a Vampire, which is a very popular archetype. There are quite a few Olivia Voldaren Commander decks that feature a copy of the Chancellor, mostly because his ability scales so well in multiplayer. He's also just a powerful beater who gets better in a Vampire Tribal deck. But he's hardly a must-include.
However, there is one thing that Chancellor of the Dross can do that probably no other card can. If you happen to be paying at the kitchen table or anywhere that regular deck construction rules don't apply (a format technically known as Freeform), you can actually build a deck of 60 Chancellor of the Dross. You ask, isn't that a bit absurd? It is, because you should only ever have 4 copies of any given card in your deck besides basic lands.
However, in the case that you can actually run 60 Chancellors, you will always start the game with 7 copies of Chancellor of the Dross in your opening hand,. This means you'll drain your opponent for 21 life. Since you start with 20 life in ordinary Magic, that means you automatically win! This concept was popularized by the Magic: the Gathering YouTuber VedalkenGurl, as seen in this video:
It's just always awesome to see people break a card in ridiculous ways. Such is the magic of Magic!