AWS is useful for scaling. #1 you can get huge numbers of servers almost instantly if you need to scale up; #2 for loads with substantial peaks, which is a lot of internet services, you can actually save money over buying all that hardware, iff you do it right.
But yeah, “everything has to be in the cloud on somebody else’s hardware” is a bit faddish–like you, I run my own dang servers for some services. (But I’ve also worked with AWS a lot, and SoftLayer, and colo for base load + AWS for peaks…)
