Digital ocean has not nearly as much of an incentive in selling or tracking the huge amounts of traffic that goes over most of their B2B customers, while your ISP wants to up that ARPU number from every B2C customer in every way possible. And you can switch your cloud server provider easily, your local monopoly ISP not so much. Digital ocean has far more to lose by doing that, while ISPs have a captive audience.

DO will forward those torrent scare / spam server abuse emails ASAP, so they won't be good for that kind of stuff.

Sure. Someone can see my traffic. You're never anonymous on the Internet. But, as other commenters have said, it's a matter of aligning incentives: the likelihood that DigitalOcean will take any notice of my measly account is much lower than my ISP, which would love to know what I'm up to. If that incentive estimation changes, I'm off to a different solution.

Right. Same goes for a VPN too.

The thought is, Who do you trust more with your traffic data? Your ISP or a VPN provider? (In this case DigitalOcean)

You're assuming that the level of trust for ISPs and VPS providers is the same (for many, it's not).

It's true. You can reduce risk by using an ethical company. I recommend Prgmr.com over DO. Not just cuz they kindly host Lobste.rs for free. Ive watched one's comments for years plus how they discuss downtime or vulnerabilities kn their blog. They consistently seem like straight-forward, honest business. Low likelihood of nefarious stuff.