Right - but SQLite handily beats the case where postgres is on the same box as well. And it's completely reasonable to test technology in the configuration in which it would actually run.
As an industry, we seem to have settled on patterns that actually are quite inefficient. There's no problem that requires the solution of doing things inefficiently just because someone said databases should run on a different host.
I sometimes dream of a local-first world in which all software works with local DB and only writes to the cloud as an afterthought, maybe as a backup or a way to pick up work on another machine. It just boggles my mind that more software nowadays relies on an always on internet connection for no good reason other then the design itself.
I think people's reaction to cloud vendors is to go local first. But, there's a middle ground VPS, rented server, even self hosting.
My problem with local first is it's fine for solo apps with the occasional sync. But doesn't work for medium to large datasets and the stuff I work in is generally real-time and collaborative. To me multiplayer is one of the strengths of the web.
If you're going to run on more than one piece of hardware, something is going to be remote to your single writer database.
As an industry, we've generally decided against "one big box", for reasons that aren't necessarily performance related.