I imagine a lot of people who use Linux/AWS now started out with bare metal Microsoft/VMWare/Oracle type of environments where AWS services seemed like a massive breath of fresh air.
Having an ability to spin up a server or a vm when you need it without having to ask a single question is very liberating. Sometimes such elasticity is exactly what's needed. OTOH other people's servers aren't always the wise choice, but you have to know both environments to make the right choice, and nowadays I feel most people don't really know anything about bare metal.
Luckily, Amazon is far from the only VM provider out there, so this discussion doesn't need to be polarized between "AWS everything" and "on-premise everything". You can rent VMs elsewhere for a fraction of the cost. There are many places that will rent you bare metal servers by the hour, just as if they were VMs. You can even mix VMs and bare metal servers in the same datacenter.
If anything it enables a hybrid environment
Look at what Amazon/Google/Microsoft does. If you told me you advocate running your own power plants, I'd eyeroll. But... if you're as large a power consumer as a hyper-scaler, totally different story. Google and Microsoft are investing in lighting up old nuclear plants.