And consider some of the scenarios where an iCloud backup is needed which include some sort of fire, flood, etc. So now they need to be sure that their key is stored somewhere safely online where they can get at it.

>99% will tell you to pound sand

Or they'll select it anyway because they don't really understand what they're doing notwithstanding big, scary warnings. A lot of tech people want everything to be configurable but that often is just not a good idea.