To answer the title: it’s IMO better for the planet. All those routers, switches and servers are powered on 24/7 anyway so why not use their bandwidth better by not having expensive and power-draining gaming machine at home, streaming to a much weaker and eco-friendly device instead?
But, save for rather basic games – and/or games where latency doesn’t matter – I can’t see cloud-streamed gaming ever take off due to most of the internet being dog-slow.