Mostly because it doesn't interest me since it isn't a privacy front-end. If I were going to set up an instance I would probably do an Invidious or Searx instance. I'm fine with Cytube being on someone else's server because there's not much aside from custom .CSS (which I have saved on my computer) I couldn't replicate if it were to go down. Something like Tubgurl I'd be more reluctant to host on someone else's server given the amount of content here and ability to ensure privacy is respected to the end user. But Cytube is loading Youtube embeds, it feels redundant to make an instance in hopes of being privacy-focused as we're watching embedded Youtube videos. Maybe if I had my own instance, there'd be a way to convert all Youtube links to go through Invidious. That would be about the biggest incentive for my own instance, but I'm not sure if I have the technical know-how to do that. I'd have to look into it.
>chat would be on your server not someone elses and could be wiped if necessary
I see your point here, but the reality is that even if I self hosted a cytube instance, the chat would still be visible in real-time to anyone who visited during a get together, and of course could be copied. If someone really wanted to, they could easily automate scraping the chat whenever something new was posted. This could be avoided by requiring people to create accounts and log in to view/participate, but I'd rather not force people to do that. And even with that, people could still save the chat just by idling 24/7.
>not have limitations on what your allowed to stream
I mainly have trouble embedding from porn websites, and creating my own instance won't fix that issue. Some websites just don't allow embedding of their videos. But I find that uploading videos to catbox.moe and embedding those works fine.
It's not to say I'll never set up a Cytube instance - maybe I'll feel like it in future. But currently it's not in my plans due to lack of incentive. I really enjoy Cytu.be and I like that random people can find my Cytube channel from the list on Cytu.be's front page. It's also one less thing to have to maintain, less cost, less headaches. Who knows what the future holds, but currently I'm not planning on it.
Sort of on this topic, about a year ago I made an "Ashley Homepage", which is intended to be set as your browser's homepage. It's HTML/CSS only and has links to relevant websites (tubgurl.com, videos.icum.to, etc.), and has a search bar. I'd make the search bar to go through a Searx instance I'd make. I thought it'd be funny to pimp out my Searx and Invidious instance - nobody really customizes theirs on the instance lists I look at.