How critical is encryption-at-rest for public cloud hosted systems

I wok as a solutions architect for web based systems on AWS and as part of this role often respond to Information Security questionnaires. Nearly all questionnaires request information about data encryption at-rest and in-transit. However only a much smaller percentage ask about other security aspects, such as password policies or common web application security issues, as published by OWASP.

I wonder how common/ likely accessing of clients data is within a public cloud provider such as AWS, Azure and GCP. It seems a very high barrier to pass for an external party, even data centers of small local web hosting companies seem to have very good physical access security. And informal conversations with bank employees tell me that accessing someone’s bank account without reason leads to instant dismissal, so surely public cloud providers would have similar controls in place?

This is not to challenge the value of encryption at rest, it is very cheap to access, so there is no reason not to enable it, but where does it sit in terms of priorities?