For entirely new applications serverless solutions are usually the first option to be considered since they are very easy to operate. Many clients also don't have much expertise in-house for operating k8s so new workloads would be operated by outsourced ops teams or development teams themselves which is very expensive. Large enterprises also have formed some sort of "strategic partnership" or alliance with either Amazon or Microsoft so cloud agnosticism rarely enters the picture. In addition to being easier to operate, skilled development teams are also very fast to deliver on serverless since there's very little infrastructure-level things to worry about. The team can focus on business logic and delivering value from day 1. If you only look at Heroku I can assure you the market for serverless is much bigger and constantly growing.
My perspective is limited and evidence anecdotal but I've seen only one on-prem to serverless "migration" project so far and that was a complete rewrite. The original codebase was ~20 years old, had a tight dependency on an expensive proprietary database and a variety of scalability issues so it would have needed thorough rearchitecting anyway. A more common pattern is to do the lift & shift and incrementally either create new services or migrate existing ones to serverless where it makes sense (the strangler pattern).
For others they already have apps running, they want to port the platform as is on kubernetes. That itself is generally a struggle.
I think knative is really cool to play around with, it quite fun but I would think twice using it in real world because there are lot of moving operational pieces, learning curves and abstractions. It is much more comfortable to just write simple services with confidence.
I classify serverless, one push deployments, app runners in Heroku bucket. Heroku more less had 50mil ARR in 2020 [1], market is quite smaller actually.
[1] https://getlatka.com/companies/heroku