Because my ec2 dev server is even more powerful, and I can easily upgrade the hardware configuration without spending $1k on a new laptop.
I never really appreciated a remote dev server until I had to work on a behemoth Java project and then a behemoth C++ project. Having the extra memory and the extra cores is great. Never having to worry about your laptop heating up or having your battery die due to CPU load is even better.
I guess if your IDE is as responsive as anything else locally and only the compiling and runtime happens in the cloud it might be somewhat pleasant to work with. But what if you decide to do something from a coffee shop and the WiFi is super laggy. Or doing something while traveling etc. I like to know that my dev station is independent of an Internet connection.
With crappy Internet connection you still can do remote development (it doesn't take much bandwidth, after all it's mostly text). But what if you need to download dependencies/docker images or upload e.g. docker image? With a remote development you can offload that to a beefy server with gigabit connection.
"Remote development" does not necessarily imply that development happens on a remote machine. I use remote development extensions to work directly on projects inside WSL2.