Postgres is great at what it does, but it is extremely inefficient for storing a small amount of data, e.g. kilobytes or a few megabytes. sqlite, on the other hand, scales nicely all the way down to a few kb.
This matters for cloud in that it means with Postgres you cannot take a "lots of small databases" strategy, e.g. database per user or database per document. You pretty much have to group a lot of data into one big database.
Many apps want to do that anyway! For them, Postgres makes sense. But in the growing world of global deployments and edge compute, the lots-of-small-databases approach is getting popular because it means you can store than data out on hundreds or thousands of edge locations, rather than a single central location. And many (not all) applications actually fit pretty well into a database-per-user or database-per-document model. Centralizing their storage only hurts performance for no benefit.
As a bonus, if you are able to run sqlite compiled directly into your app, not making any kind of network connection, it can be much faster than Postgres, especially in "N+1 select" situations (which are well-known to be a problem with most SQL databases, but are not a problem when using local sqlite). Postgres does not support running as a library like this.