Anecdote: I have it enabled and stored forever. And I will try to make sure my location history survives the announced change.
I have had many instances where a precise recollection of my whereabouts was incredibly helpful to me and I would not want to miss it. What are some examples I can think of right away:
Knowing when my last checkup at this particular doctor was. Their system purged all old data and browsing through the paper folders would have taken them forever, and so they could pinpoint the time frame they have to search. Reduced time from hours to less than a minute.
Knowing when my last visit to this particular shop was. Instantly knowing when the purchase date was of an item I bought there. Saved a lot of time searching through all the receipts, becaue I instantly knew it was beyond the warranty period and bothering with receipts and returns would be pretty much pointless. Saved an hour or more of searching for the receipt and then be disappointed, or worse, not finding it, driving to the store asking them to look up the copy in their system, only to then find out it's out of warranty.
Organizing photo collections from vacations and road trips. EXIF data shows date and time, but not GPS (with the camera, at least). With Google timeline, I can easily and quickly find out where each photo was taken.
Remembering vacations and roadtrips in more detail. Whan it's time to revisit vacation photos, the timeline can show much more detail of where I went that day and that helps me remembering more of what I experienced there, especially for places or circumstances when photos to remember them couldn't, shouldn't be made or simply weren't, because it didn't seem to be relevant at the time.
Filling out time sheets for work. Timeline always knows when I was in the office, at a client's location, how I traveled there, how far and when, for filing expenses and reports.
Retracing my steps looking for a lost item. Arrived somewhere, noticed something was missing and now had a good chance of retrieving it, because I could then walk back the exact route of the day and either remembering where I might have misplaced it or knowing where to look for.
Revisiting tourist sights from vacations years ago or giving recommendations to friends about them. Photos rarely help with that, especially when touring large cities in East Asia, because even if there's text in the photo, it's difficult to tell others about the name of the place and the area is densely packed with places, so approximate locations don't help.
It is some form of an externalized brain that remembers times and places that I could never, ever hope to remember at all, and certainly not with all the details. People with photographic memory might not need any of it, but my linear time and place memory is so bad, that it helps me a lot. Yeah I could write a daily journal instead. I don't have the time, energy and discipline to do that. I am thankful that technology can do that for me.
That Google wants to get rid of the central unencrypted storage of all this location data is hardly surprising. Firstly, because it is probably compute-intensive to maintain. Millions of users randomly accessing their location data piecemeal will be a resource drain, as it will be in a database form and look-up and processing will definitely be difficult, especially with Terabytes of it accumulating and being otherwise pretty cold data most of the time. Secondly, because being in control of user data with a huge impact on privacy and legal matters, is probably a liability for Google. Every law enforcement agency can contact them all the time and try to extract the data from them for whatever investigation they have. If Google has the data, they will be compelled to hand it over. If they don't, they're punished. If they make a mistake with that, they will be sued. If they don't have it anymore, or it's all end-to-end encrypted, they can more easily refuse subpoenas. And thirdly, because even if they now don't count the storage towards the users' contingents, they will of course do so in the future. Google always does that, eventually counting everything towards the contingent. They don't do it right away merely to lessen the backlash, nothing else. And it is reasonable to do so, because every byte stored on their servers must be paid for by someone, eventually. If my location history is X amount of data, of course it's my responsibility to pay for it.