It allows you to incrementally migrate off of providers like S3 and onto the egress-free Cloudflare R2. Very clever idea.
He calls R2 an undiscovered gem and IMO this is the gem's undiscovered gem. (Understandable since Sippy is very new and still in beta)
Amazon uses $/gb as a price gouging mechanism and also a QoS constraint. Every bit you send through their pipe is basically printing money for them, but they don't want to give you a reserved fraction of the pipe because then other people can't push their bits through that fraction. So they get the most efficient utilization by charging for the stuff you send through it, ripping everybody off equally.
Also, this way it's not cost effective to build a competitor to Amazon (or any bandwidth intensive business like a CDN or VPN) on top of Amazon itself. You fundamentally need to charge more by adding a layer of virtualization, which means "PaaS" companies built on Amazon are never a threat to AWS and actually symbiotically grow the revenue of the ecosystem by passing the price gouging onto their own customers.
To them "that's just what bandwidth costs" but anyone who's worked with this stuff (sounds like you and I both) can do the quick math and see what kind of money printing machine this scheme is.
Some people want to host a lot of warez and pirate movies and stuff but that doesn't monetize very well per GB consumed so pricing bandwidth high means those people never show up, thus saving a lot of trouble for AWS.
I remember when salesforce.com announced a service that would let you serve up web pages out of their database, it was priced crazy high (100-1000x too much) from the viewpoint of "I want to run a blog on this service" but for someone who wanted to put in a form to collect data from customers it was totally affordable. Salesforce knew which customers it wanted and priced accordingly.