Exactly this. I'd add that homestays allow me to pay for just what I need - a comfortable/safe/private room to stay in. A lot of the extras you're paying for at a hotel are totally unnecessary for me:

-someone making the bed + tidying the room

-fancy buffet

-facilities like gym/spa/TV

-general feeling of 'luxury'

Obviously there are some people who do care about these things, but as I don't I'd rather not pay for them.