Lots of reasons. My company started using AWS (and specifically S3) something like 9 years ago; R2 wasn't even on the radar back then. If I were starting from scratch today, I'd be looking seriously at Cloudflare as a platform, but it's only in the last year or two that they've offered these services that would make it possible to build substantial applications.

R2 bandwidth is free, but storage is not.

R2 also doesn't have all the features that S3 does - including an equivalent of S3 Glacier, which is cheaper storage than R2. R2 also doesn't have object tagging, object-level permissions, or object locking. Sure, you could build your own layer in front of R2 that gives you these features, but are you necessarily saving money over just using S3?

Because of the other AWS services you get access to.

inertia, mostly. If you're already using AWS and have your system set up, adding a new vendor is going to be a lot of extra work compared to just using what's available.

Not necessarily R2, but Cloudflare mostly has free egress, so one could put it in front of a public bucket.

As others mentioned, it still lack many features if compared to S3.

Because of "The Rise of Worse is Better" (search it) and because a 900-lb industry gorilla is never displaced quickly or easily.