The point of cloud-init is to be a provider independent entry point that runs on first boot and lets you specify per node metadata. You use it to install a package or download a script which then does what you want. Before cloud-init, each cloud provider had their own way of running a bash script on first boot.

For the Raspberry Pi specifically, you would use cloud-init to program Raspberry Pis/compute modules.

Why can't you just simply build a VM image or SD card image and copy it to all the Raspberry Pis? Well you could, but then you need to build a unique image for each Raspberry Pi. Cloud-init lets you factor out the differences between the Raspberry Pis and reuse a single image for all of them. E.g. each Raspberry Pi can have a different hostname, account name, root password and all you have to do is put them in a single configuration file.