This is true. Git-LFS can dramatically increase the size of the repository on-disk (e.g. in our GitLab cluster), but dramatically decrease the size of the clone a user must perform to get to work.
Note that this can now be accomplished with Git directly, by using --filter=blob:none when you clone; this will cause Git to basically lazy-load blobs (i.e. file contents) by only downloading blobs from the server when necessary (i.e. when checkout out, when doing a diff, etc).
I prefer keeping large files out of source control and thus far I've not encountered a problem where their introduction has been required.
While I share the sentiment of keeping large files out of source control, one use-case I believe warrants having large files in source control is game development.
that's about the only conceivable niche I can think of, even then I'm skeptical about turning the VCS into an asset manager
You can't diff and I'm not not convinced the VCS should carry the burden of version controlling assets. Seems better to have a separate dedicated system for such purposes
Then again I don't do game development so I'm not familiar with the requirements of such projects
In our project it helped dramatically as you only pull X MB instead of X * Y MB when a CI or developer clone the (already big) repo.