Its costly and risky to run 100 VMs, maintaining them and keeping them up to date, monitoring them and knowing when they are no longer needed.
It is cost ineffective to have security audits on 100 VMs, maintaining access to them, auditing whats happening on them.
It is a ton easier to allow someone only access to one namespace, limited ingress domains (which get provisioned automatically) and allow them to only run non root containersl
The question is not what the actual benefit is (its clear and i mentioned it in my paragraphs before), the question is will kubernetes ever become so lightweight, stable, easy to use so that its feasable for normal people to run it on a 3-5 node cluster in small companies.
And please lets ignore all those small companies where people log into their VMs by hand and maintaining them by using snapshots and cloning existing VMs. Those small companies might and should just migrate to cloud managed services completly.