One of the largest use-cases for local LLMs is NSFW chatbots, like DIY Replika, AI girl/boyfriends, as the hosted services are too censored to be used for this. Yes there are smaller models, but they're not as intelligent. Similarly people using LLMs as a writing aid need to use local ones if they're writing a story (or .e.g DnD campaign) involving violence, as the hosted ones are generally unwilling to narrate graphic violence, and the smarter the model, the better the story quality.

Given that censorship is one of the biggest complaints about the hosted LLMs, it should be no surprise that some of the main use-cases driving local LLMs are those involving creating content that censored LLMs are unwilling to create.