Sure, there are a ton of reasons to archive. And if it's cheap to do (in terms of money, yes, but also in terms of time, effort, mental health, etc.) then I am of the mind that we should archive
everything.
But, it often isn't cheap to do, and in that case, it makes sense to prioritize. The high priority items for me are the things that I might want to share, the ideas I want to amplify for my contemporaries and future generations that might examine my life. Stuff like [1] [2] and [3] which has influenced my thinking fundamentally, that I hope to build upon so that others can build upon what I have built.
I'd argue that you do this intuitively: you're mentioning a letter from your family's past because it is a high priority item--it's relevant because it was the last written words of your great-grandmother's first husband.
But, there's a lot that isn't worth keeping. My first form of archiving as a teenager was keeping ticket stubs for movies and concerts--a decade later I was going through my pile and found that I didn't even remember most of them. The better movies, I remembered--and I had them on DVD. The better concerts, I remembered--and I also had journal entries and CDs to remember the experience and the music. It's not important to me where/when I saw Everything, Everywhere, All At Once in theaters, but I have it on DVD and I can't wait to show it to my niece when she's older. And sure, I saw Amigo the Devil live, but frankly, he's not an artist you need to see in concert--the greatest impact of Cocaine and Abel[4] on me was when I listened to it alone in my room. The ticket stubs simply don't matter to me.
[1] https://www.viridiandesign.org/notes/451-500/the_last_viridi...
[2] https://www.ted.com/talks/brene_brown_the_power_of_vulnerabi...
[3] https://digital.wpi.edu/pdfviewer/wm117p10z
[4] https://www.youtube.com/watch?v=ZzjtLm0G49E
EDIT: All the things linked above, I have backed up in one form or another. Notably, the Schutt paper isn't at its original URL.