In Europe at least supercomputer are organised in tiers. Tier 0 are the highest grade, tier 3 are small local university clusters like the one you describe. Tier 2 or Tier 1 machines and upward usually require you to apply for time. They are definitely highly utilised. Tier 3 the situation will be very different from one university to the next. But you can be sure that funding bodies will look at utilisation before deciding on upgrades.
Also this amount of GPUs is not sufficient for competitive pure ML research groups from what I have seen. The point of these small decentral underutilized resources is to have slack for experimentation. Want to explore ML application with a master student in your (non-ML) field? Go for it.
Edit: No idea how much of the total hpc market is in the many small instalks, vs the fewer large ones. My instinct is that funders prefer to fund large centralised infrastructure, and getting smaller decentralised stuff done is always a battle. But that's all based on very local experience, and I couldn't guess how well this generalises.