What you’re describing is outsourcing. It’s still possible with on-prem or cloud VMs. You just hire a contractor provide those services.

You are correct but I don't know about the cost structure. Also you have to somehow verify that they do a good job. You sometimes only see bad work when something goes wrong. Also you have to first find a company that provides the service.

The cloud makes it simple. They offer you managed service X. They hire experts for service x and you pay a part of the cost on top of your infra cost. No searching. No vetting. You just use the service.

I see the why this might be attractive. It isn't to me. But the pencil pushers like it.