Okay, first: that's not the midwest. The midwest is Ohio to Kansas and points north. The area you're talking about is more accurately the Great Plains, though even that is not a perfect descriptor.
As to why it's so sparsely populated, read about the
Dust Bowl.
Depends on where you turn for the definition of midwest. The official census definition is where the Ohio to Kansas part comes in, but I know plenty of people who think of eastern Colorado, and Oklahoma to be part of the "
midwest", more from a cultural standpoint.