One place it would be useful is if you are worried about somebody breaking into your home and stealing your computer. Don’t store the key on the home computer, instead store it on a cloud server. The home computer connects to the cloud server, authenticates itself with some secret, then if the cloud server authorizes, it can return the decryption key.
Then if your computer gets stolen or seized, it’ll connect via a different IP and the cloud server can deny access or even wipe the encryption key.
this doesn’t protect against all risks, but it has its uses.
Example: https://www.ogselfhosting.com/index.php/2023/12/25/tang-clevis-for-a-luks-encrypted-debian-server
I tried self hosting Pixelfed but gave up because it wouldn’t work. I’m used to Docker containers that are able to just start up by themselves, but the guide didn’t work for me. Maybe it’s time to try again.