The logic isn't self evident because it is irrelevant that their total demand doesn't add up this way, because the unit cost of the capacity is higher, and so the cost still ends up being far higher.

The unit cost is higher for many reasons, but the two basic ones are margins (exorbitant ones; this is not an efficient market) and that the providers also need to charge for the unused capacity to meet demand from customers behaving in ways they don't on fixed capacity systems, where spreading workloads over time wherever possible tends to become the norm.

The demand curves when you're charged for total demand over time rather than peak demand are fundamentally different, and so while you're right the peaks rarely add up in the worst possible way, empirically the peaks end up high enough that cloud compute is expensive even before the exorbitant margins the large cloud providers charge.