"Why not just co-locate a box of your own?"
"Co-locate box at Sprocket Data in Dallas for 6 months ($60/mo for 100 GB traffic, 100 mbps burst)"
Because it's too expensive when you're just starting out. I could afford $60/mo, for instance (because I'm older and have lots of kizzash) but I'm hosted for $8/mo with 1.5TB of throughput.
If your site gets much traffic, you'll be over 60GB before you know it. :-o