Or where locality is critical. Like if you have a game that hits peak traffic at different times throughout the day in different regions. So, a company may not want to own hardware in multiple regions, when they would only be at peak usage for a few hours.
The variation in peak loads tends to be far smaller for most people than what they imagine, but indeed it can sometimes be cheaper. The window needs to be very short, though, to outweight the large cost differential. And you don't need to buy - you can rent.
Yes, but in practice it's even rarer for people to have loads that have multiple spikes a day, to the point it's a rounding error you can mostly ignore outside of very unusual niches. Usually the day-night cycle entirely dominates in terms of traffic variations and is already long enough to make auto-scaling unviable in terms of cost.
You're right that if the longest window is short enough to make autoscaling financially beneficial over managed hosting, then you also need to make sure that you don't regularly have other spikes that can tip things back to being unprofitable.
