I think one thing that articles like this miss is that not all cloud services run, themselves, in VMs. For example, most of Google's don't. While virtualization has improved a lot, it wouldn't be possible to replicate many of Google's cloud offerings with competitive performance and cost on Google's Compute Engine. Cloud Storage, BigQuery, serverless (Cloud Run, App Engine, Cloud Functions), Spanner, Bigtable, and Firestore all come to mind.

One big challenge for cloud workloads is multi-tenancy. If you want to run arbitrary untrusted code on the cloud, your only option is something like gVisor (which isn't exactly a compromise-free solution). Nested virtualization is not secure and will likely even preform worse.