Is your phone also made of indestructible materials so it can't break, and magnetically linked to your person so it can't be stolen? Backups exist so you don't lose precious photos/data if you lose the device. Most People™ do not have the technical knowledge to set up a self-owned backup system, and/or will not realize how badly their future selves will wish they had backups if the setup friction for a self-owned solution is too high to conveniently do it right this second.

That must also be the world where more than a tiny number of people are using GrapheneOS

But you still need backups right?

For most people "the cloud" is where you backup stuff. If you have a personal backup strategy that doesn't involve the cloud, you are not "most people".

Doing backups the right way take some skill and investment if you want to do it by yourself. It may involve setting up a NAS, and some discipline with physical media. You have to do your own security too. Most people don't want to do that, so, cloud backup it is.

It is not a perfect solution, even beyond the privacy considerations, like you can still lose your data by losing your account, but from my personal experience, people lose their data less often now that they have cloud backups.