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A cloud service provider has a couple of benefits compared to a traditional hosting provider:

You don't have to worry about installing and managing any of the services. They take care of the licenses, installation, updates, auditing, security, monitoring, standard conformity, backups etc. You don't need to worry about any of that, it's all taken care of. And the way they have it setup, it's all hardware agnostic as well. So they will roam their services between all different servers. When a server has an issue or needs maintenance, it's just taken out of the pool and put back in when it's ready. And they put in more servers if they see more demand for a service. Another big benefit is a pay per use pricing model. With a lot of the services they provide the software can get pretty expensive to own and operate, whilst most of the time you don't even need it that much. But when you need it, you really need it. Say for example you need an simple AI translation service, so users of your app can easily translate stuff (a common feature in Europe). If you want to setup your own servers with high end GPUs and have it run the translation software, sure that works. But it will be expensive to buy or rent that hardware, take a lot of time to setup and manage and then just sit idle for most of the time waiting for something to do. With a cloud service provider you just check the box for auto translation, go through a short wizard to get credentials and your up and running. And you pay for every actual use, so if nobody uses the feature, it won't cost anything. And scalability isn't an issue, if you suddenly need a lot of a service, the capacity is available when needed. And then scale down again once it's done. And keep in mind this is just one example, they offer this for dozens of services. Another big upside is the central management, everything is in one place. This makes it very easy for people to work on the setup. You can just train to become an expert in Azure for example (with certification available) and any company can hire you to advice and work on their Azure stuff. It also makes things like auditing very easy, the management tool has builtin tools for auditing, logging, separation of roles etc. And the finance admin is also very easy with a single completely specified invoice at the end of the month. The management tool has tools for managing budgets and costs (present and future) as well. They also have datacenters in all regions, allowing for low latency across the world. It's very easy to have a single application be available all over the world, with optimal latency and very little effort. This includes auto fail over where if one region has a major issue (say war related for example), it will not result in down time. You can imagine how important this is for government stuff.

There are probably more benefits I can't think of right now. (for example the complex cloud networking stuff made easy)

There is a reason AWS and Azure have become so popular and big. We all like to joke ha ha cloud is just servers. But at the end of the day that's simply not true. It allows for very low TCO for a very high service level. In short the cloud service provider takes care of a whole lot of headache, for a price that's lower than it would be if anybody tried to do it themselves.