As sibling says, the question is too vague. I also pay for icloud, but I store all my things locally on my devices. The point is effortless sync and basic backup (protect pictures from phone theft).
I also pay Hetzner for a storage box or whatever it's called, where I regularly send backups of my stuff with restic. One of the sources is a local fat ZFS NAS, which I can access from everywhere via wireguard.
Yet, the only reason I'm contemplating buying a new iPhone is to get larger local storage. I'm also biting my fingers for not having pulled the trigger on a larger SSD for my main machine two months ago.
Every solution has different use cases, and I think no single one is perfect. I get the best value from using a mix.
You're someone who is comfortable in a terminal desktop environment on Linux. What you or I do for storage is irrelevant to the wider consumer market.
Apple's hardware prices mean that millions of people buy the smallest on offer and pay Apple monthly instead. It's a deliberate play for recurring services revenue.
My point is this: would they buy a phone that had virtually-zero free storage and rely solely on iCloud? Probably.
Some of them had 64GB models, in my view they are already doing that!