From what I've seen, its an auction to provide a service.
Why would I ask my neighbour to host data, rather than two or three expert companies that understand backups, power- and temperature requirements?
I think people use S3 not because their prices are great, but because they're not comfortable trusting some no-name company that offers better pricing. Protocols like Filecoin aim to remove the need for trust, by having untrusted storage providers prove that they're storing some data.
These anonymous storage providers almost certain aren't following convention best practices in terms of RAID, UPSs etc, so a single copy of the data has a greater likelihood of being lost, but we can compensate for that with extra redundancy.
But I'll also try to answer your new question: You're right that it's just an auction to provide a service, but crypto enables the auction!
S3 can charge such high margins because they're a trusted brand, the chance they'll lose my data is much lower than the chance I'll lose my own data, but this makes it hard for anyone else to enter the market without spending a lot of time proving themselves. Filecoin includes fancy cryptography and incentive schemes which, if you trust them, allow you to trust any storage provider using Filecoin.
Crypto payments means that anybody, anywhere in the world, can participate in the auction without spending any time negotiating contracts or setting payment rails. They can turn their computer on and start storing files.
This turns file storage into a commodity service and allows you to store your files for commodity prices, that's an incredible win!
You have now seen a use for the technology which is not a scam.