I think they're mostly targeting customers who want an AWS- or GCP-like experience from a developer perspective (compute is abstracted and you can provision it with an API, etc.), but want to own their own compute infrastructure and have it on-prem. That market has mostly had to cobble together consumer-inspired HP/Cisco/whatever stuff historically (like, one of the early talks about the Oxide value proposition was complaining about why every server in the rack needs a CD drive, which was the norm from Dell), because the kinds of stripped-down, super-efficient hardware designs the hyperscalers were building weren't available to the general public, so this is that: hyperscaler-like technology for people who want to own it themselves.

I think the motivations for why people would want to own their own are probably a mix of financial (at a certain scale there's a tipping point and it gets cheaper), and regulatory/compliance/whatever, like if it's healthcare data, or defense, etc.