[ZWoz]

I hope I don't sound combative, but "most people can't handle that imagined level of control in reality" don't seem very fact based. All companies used to self host, because there wasn't cloud. Many organisations still self host, like shared hosting providers, governmental institutions, banks. I have two counter arguments against "big cloud can do better":

1) There is often assumption, that people behind cloud services are smarter than anyone else and don't make mistakes. In reality, they still are humans. Big names attract some bright people, but not anyone is genius with good working in team skills.

2) Cloud companies have much harder problem to solve. They have two hostile fronts, outside world and clients. They need protect themselves from malicious clients and keep clients separated. They offer generic services for everyone, so there is unused functionality for your use-case. You can disable/uninstall things in your self hosted setup (infra as whole, not meaning inside your virtual machine), filter aggressively in network perimeter and so on.

Self host don't only mean "running in some closet somewhere or in some random colocation center". I can't say, how things are done in US, but in my country government has several DC-s/server rooms for governmental agencies. There is on premises hosting too, sometimes with very good physical security.