"encrypted at rest" is great to guard against stolen laptops, or in the server room both against people breaking in and stealing servers (unlikely at the security level of most hyperscalers, but possible) or more commonly broken HDDs being improperly disposed

How does that transalte to VMs? If "encryption at rest" is done at the guest level, instead of (or in addition to) host, that would be pretty close to minimal "encrypted except when it use" time and protect against virtual equivalents of pulling a hard drive out of a data center.