For me, it's mostly because I want whatever I'm running to stay on my own home network, with access to Home Assistant, my homelab, and so on. Beyond that, old laptops are hard to beat for this: I already have a few, plus spares, they sip power, the battery is a built-in UPS, and the screen and keyboard mean I have a console when something goes wrong — no hunting for a monitor. There are plenty of use cases for a cheap cloud VM or VPS too, of course.

In my case, most of my VMs live on a proxmox cluster of HP EliteDesk minis, with the laptop sitting outside that as the thing that manages the cluster and a few other odds and ends.

This can work, but increasingly there is benefit from local, including places that want data to be secure and not in the cloud. This is a thing. It's normal. It's just new to people who haven't realized how common it is.