How isn’t? You’re paying for a VM with access to a slice of resources. Yes fly.io offers some clever deployment and routing, but it’s still your code running on a VM.

You could ask the same question about why Hetzner is so much cheaper than the big cloud providers. If there weren’t any tradeoffs, presumably every company running containers or VMs on a big cloud would move to Hetzner and save 80%. Why isn’t that happening?

Whatever the answer is, it’s probably the same answer for why many companies would likely be willing to pay more for fly.io than Hetzner as well.