Docker is useful when you don't want to care about the underlying operating system or you might be deploying on different operating systems etc. Also if you want to quickly switch providers (like going from Ubuntu 18.04 on digital ocean to Windows Server on Azure) since it's a self contained image.
This self contained image is useful during development too. I can cleanly separate dependencies between applications and dev/test/prod. For example I develop a node app based on node 12 + pg 11 but I tinker with ghost too which requires node 10 + mysql. Having this in Docker keeps cruft and complexity off my macOS installation at the cost of space. Having multiple versions of a runtime/database etc can quickly become a nightmare to manage on local operating systems.
Operationally if you can control deployment and you don't need many servers, deploying to the base operating system makes sense. Docker/Kubernetes shine when you have scale + need to provision many servers across different platform providers.
On that same note... when do Terraform / Ansible start to make sense?
in dev: You can setup dependencies without worrying about underlying os. So it is easier for building a new dev machine, adding a new team member, etc.
in integration test: you can setup multiple integration test environment as long as you have enough resource. Running multiple integration tests without interfering other team members is the major benefit here.
in prod: as you may know, for isolation and horizontal scaling. Easier roll back and update?
User-to-user isolation is hard, and extremely hard if any of the users could be malicious. Docker is broadly neutral here - adds a few tools, might add a few vulnerabilities.
If you have a 100 user SaaS platform, do you run Linux containers on top of Linux just for isolation?