A lot of people don't want to be dependent on iCloud, or any other cloud service. For some, it's a privacy issue; for others, they may have a limited data plan that would get used up too quickly with larger photo's, videos, and music files. Maybe, they fly a lot, and don't have access to files on the cloud, so they need to be able to store all of their files locally to work with them. With larger video files (prores), you'll need more local storage just to take the video, before it can be offloaded to a cloud service, or external drive. The storage space on the phone could essentially be a swap space between creation of the large files, and offloading to the cloud.I really don’t understand the point of 512gb or 1tb (for most people) given that iCloud exists.
There are plenty of reasons people need/want larger capacities. If you're not one of those people, enjoy the money you get to save on the lower capacity storage phones.
Cheers.