Personally I don't have a huge amount of experience with either, so I'm possibly a bit biased, but I see k8s as either a hyperscale solution or someone wanting to be cool and trendy.
Same goes for serverless, other than niche use cases of say running python code in a 100% Azure ecosystem when you just have absolutely zero other choice.
It may not be k8s as we know it today, but many SMEs are most certainly using containers, via Docker.
Ultimately containers use less resources than a full VM and allow dependency management.
VMs is a reducing business.
I'm aware it's technically possible to have a large, wide fleet of containers...but I don't really see it going that way (at all).
My current thoughts of why is separation of knowledge - IT knows how to manage infra and virtualisation, and the vendor/teams know how their individual docker containers need to be set up/work.
I do agree full virtualisation is probably on the decline, but the current tech is definitely staying around in my size of business.