Self-publishing is a viable option, but for novels it's just too hard. There are too many odds against you: lack of distribution channels, no one but you vouching for the quality of your work, lack of a sales force, no marketing campaings, etc. Some people do get lucky getting their novels picked after self-pubbing, but as has already been mentioned, it is a very rare case when that happens.
Self-publishing is good for other kinds of works. Non-fiction, for exmaple. Especially non-fictoin for a regional audience. If you have a well-defined niche, self-publishing is also for you. If you want to publish a memoir or a poetry book for your family, you should also self-publish. If you are already a renown expert, you could also self-publish.
Wether to go the traditional route or to self-publish depends really of what you want to achieve with your work. Success stories like this are encouraging because they are rare. Stuff like this doesn't happen every day, or every week. These are ver, very rare cases, that's why they makes the news.