Reliability. SSDs break and screw up a lot more frequently and more quickly than CPUs. Amazon has published a lot on the architecture of EBS, and they go through a good analysis of this. If you have a broken disk and you locally attach, you have a broken machine.
RAID helps you locally, but fundamentally relies on locality and low latency (and maybe custom hardware) to minimize the time window where you get true data corruption on a bad disk. That is insufficient for cloud storage.
Sure, but there's plenty of software that's written to use distributed unreliable storage similar to how cloud providers write their own software (e.g. Kafka). I can understand if many applications are just need something like EBS that's durable but looks like a normal disk, but not so sure it's a fundamentally required abstraction.
RAID helps you locally, but fundamentally relies on locality and low latency (and maybe custom hardware) to minimize the time window where you get true data corruption on a bad disk. That is insufficient for cloud storage.