Re: why?
Every cloud thing is encrypted out of an abundance of fear. Considering AWS, where most of my experience is, you have the option of either using the default account key or your own per-instance KMS key for disk (ref: https://docs.aws.amazon.com/AWSEC2/latest/UserGuide/data-protection.html). The caveat here is that if someone gets access to your whole account, through IAM credential compromise or IAM permission stupidity, then they can access your data - just like if they root your box through SQL injection.
EC2 instances, in particular, are virtual machines. You can format virtual disks as you would any disk, use any filesystem (ext4, btrfs, zfs) that you like, and enable any (additional) encryption that you would like. RDS (managed database without a virtual machine) instances have a separate encryption flag to use your own key for at-rest encryption - but as always with anything aws, your data is never clear-text on disk.
All of this "extra" encryption is just multi-layer encryption - physical disk, logical disk, filesystem, now application layer - where no single layer of modern encryption has been compromised. Permissions, maybe - but it's usually the application layer that is compromised by external bugs, which fells all higher layers all at once. (Application layer and probably filesystem-layer encryption might save you if you set your permissions badly, where probably virtual-layer encryption will not.) All of the additional layers of encryption is yet-more compute overhead for data use -- power, latency, compute. (FWIW, modern encryption processing gets to - I read recently - 0.16 cycles per byte, with AVX-512 parallelization of PCLMUL(??) instructions.)