Hey, you just answered your own question. Beginners no longer have to setup their own machine/server, they can simply create an account on c9.io, they don't even have to pay for it and bam you have a full ubuntu workspace ready instantly without any effort which is very useful for teaching them their first programming language.
I already have a full Linux workspace ready instantly. I'm typing this in it right now. It's my laptop.
Linux is so simple to use now that my liberal-arts relatives are using it. Why use expensive, legacy, less-powerful OSes like Windows or macOS when Linux is available? Why run something over a net link when Linux can run locally?
For a rails app it's not a stretch to have to install postgres, rvm, ruby, some compiled gems, and redis. Then you need to make sure postgres and your rails server are running.
These aren't insurmountable and we can write documentation around it but compare that to 'Log into c9.io, copy this workspace and work on a ticket'.
I work with people that want to learn how to program and I hear feedback that getting an environment setup is overwhelming somewhat regularly. These online IDEs look like they can really combat that.
cloud9 on the other hand took me about 3 minutes to create an account, django workspace and to start developing with it.
that is a massive difference.
But I see no justification for creating a complete development platform in the cloud.