> with its reliance on simulators for local UI testing

I can run an Android app on my phone and have it pop up in Android Studio. I don't see a reason you couldn't do this with a remote simulator or even a remote physical phone.

Right, on a LAN things are fine, but when it's in the cloud and the latency jumps to 100+ ms I would imagine it would make for a very laggy experience. Cloud gaming tackled these same problems but that required a huge investment in infra and R&D. At that point it would just make sense to hand out more powerful laptops with IDEs for local development.