A cloud wallet is able to move the whole complexity of the SSI algorithms to the server side, so the clients only need to render the data. This makes the development of new clients or integration into existing applications much easier. It also provides an equal security level for all users and does not exclude any smartphones because of their hardware capabilities. Besides that it allows the user to access his credentials from multiple devices without the need to sync them.
Of course the user is losing offline capabilities and has to trust the server to not misuse personal data. But this is a tradeoff that can be acceptable for many use cases when you want to start with verifiable credentials with great user experience and low development effort.