Then the effective cost of scaling CPU > RAM > storage > network due to power & space limitations. Spending extra processing time on 50% of your content would be wasted effort as its never read again.
And yes, increasing effective storage might increase cache width/lifetime, but its not by that much to dramatically inprove access rates. Especially when most content by unique bytes is compressed audio/video in the first place.
Zstd 3 to 5 is nearly free in terms of not bottlenecking disk or network. Zstd 12 to 19 gives amazing compression results and still result in speedups when reading from disk. It really is a wonderful all purpose compressor.
One of the nice things about Zstd is if you try to compress an already compressed stream, it short circuits. So even if you are given say HVEC MP4 and run zstd -19 on it, it will "compress" immediately and not DOS your pipeline.
I think they probably don't care about storage on the devices that do the compressing and are optimizing for quickly pushing hot content to edge locations. So the compression at the source saves bandwidth during the pushing to edge phase and allows the edges to hold more (reducing churn, further saving bandwidth back to the source).
Put a different way, they're trying to make cache evictions cheaper (less bandwidth to refill) and less likely (bigger cache on same disk size)
"Ignore cold assets" makes more sense with that framing
Although if that's the case, the CPU statement still is a bit confusing.