What scenario allows Microsoft or Google to dedicate hundreds of CPU/GPU cores to your, just your, entertainment. That's usually one of the arguments for streaming hardware, that somehow on the server side there's an unimaginable amount of computing hardware at your service, all for the low price of $free/month. But I'm not seeing a scenario where that makes any economic sense on the server side without some economic incentive on their part, which surely will mean economic concessions on the consumer's part.
Which isn't even delving into many more questions about the entire proposition of hardware streaming.
Again, it is all about having interconnected hardware. Let's say that you want to simulate water, a developer can dedicate one or more server blades to simulate the physics and share that simulation with potentially hundreds of thousands of players. Right there you have a single or multiple blades being fully dedicated to running a single simulation, 100% of the power to make the best version possible of a simulation on that CPU. Compare that to an equally good or even better CPU you can buy for your local PC, but when you run the game it has to simulate the AI, physics, work with the GPU to setup the scene, handle animations, etc. Do you understand how you will not get water physics that compare? You can run the same example with AI, weather simulations, destruction physics, physics in general. Imagine also a MMORPG with thousands of players in a single level, fighting with each other, how about if a developer shares the load for all of the physics simulation, animations, etc. on everyone of the CPUs/GPUs that are logged into the same level? How will a single very good CPU/GPU compare to that? This is why you are starting to see developer get excited about the possibility and they will tell you as such.
"I think that the more interesting question is how stuff like Google Stadia will change things. It gives developers something different. In the data center, these machines are connected to each other, and so you could start thinking of doing things like elastic rendering, like make a couple of servers together, to do physics simulations that may not be possible on current local hardware. I think you'll see a lot of evolution in this direction."