what is the advantage to using your service over just deploying a lemmy or mastodon instance on any cloud service

For the flagship instances (Lemmy, Mastodon and the @communick.com Matrix/XMPP servers):

• Being paid-only basically guarantees that no bots or trolls will be in that instance. Charging just a little of money is profoundly effective deterrent of bad actors.
• The instance is a way to connect to the fediverse at large. It’s more of an utility that a tightly-knit network. Because of that, the (admittedly few) people using are not worried about drama, “community rules”, or anything like that.
• It’s really cheap: you can get access for as low as $0.50/month if you come with a group of 10 people, or $10/year for solo accounts.
• It’s fairer than the “donation-based” instances: I heard people saying things like “I’m donating $20/month to my instance”, which might be something that I’d understand if they just want to feel good about a cause, but from an economic point of view it’s absolute insane. It destroys any pretense of “community” and establishes a very bad dynamic between admins, donors and freeloaders.
• Things are predictable and reliable. In the previous waves of migration from Twitter to Mastodon, there was a good amount of new signups, but it wasn’t from people who just wanted to try it out and leave the next day. That makes my life a lot easier for capacity planning, dealing with requests from actual customers, etc.

For the Managed Hosting servers, the answer is simple: if you can host your own instance on your own, great! But there are plenty of people out there who are more interested in having an instance that works well for them than dealing with the technical aspects of running an instance.