The problem is sizing and consistency. When you're small, it's not cost effective to overprovision 2-3 big servers (for HA).
And when you need to move fast (or things break), you can't wait a day for a dedicated server to come up, or worse, have your provider run out of capacity (or have to pick a different specced server)
IME, having to go multi cloud/provider is a way worse problem to have.
There are a number of providers who provision dedicated servers via API in minutes these days. Given a dedicated server starts at around $90/Month it probably does make sense for alot of people.
And when you need to move fast (or things break), you can't wait a day for a dedicated server to come up, or worse, have your provider run out of capacity (or have to pick a different specced server)
IME, having to go multi cloud/provider is a way worse problem to have.