It heavily depends on the use case. For these AI setups, you're completely correct, because the people who talk about how amazing it is to run a <100B model at home almost never actually end up using it for anything real (mostly because these small models aren't actually very good) and are doing it purely for the novelty.

But if you're someone like me who intends to actively use the hardware for real-world purposes, the cloud often simply can't compete on price. At home, I have a mini PC with a 5600G, 32GB of RAM, and a few TBs of NVME storage. The entire thing cost less than $600 a few years ago, and consumes around 20W of power on average.

Even on the cheapest cloud providers available, an equivalent setup would exceed that price in less than half a year. SSD storage in particular is disproportionately expensive on the cloud. For small VMs that don't need much storage, it does make sense, but as soon as you scale up, cloud prices quickly start ballooning.

Plus you still have access to the whole lot when your ISP goes down (maybe less of a problem than it used to be, but not unheard of)