Here is my thoughts on it:

Why would the "cloud mining provider" rent out the hash power instead of just taking the profit themselves? I can think of four reasons. First reason: they've found that it's possible to rent out the rig for a higher price than the expected profit. In other words: whomever is renting will most likely go in minus. The average weekly return on investment, measured in BTC, is constantly sinking due to increased difficulty and better hardware being poured out to the market. At the same time the value of the BTC may be growing. The mining company has probably done quite extensive research on this, much better research than the average naïve and optimistic bitcoin enthusiast.

The second reason may be that they want to expand the farm, and that such expansion requires lots of capital, and finding the capital may be hard. Then again, if one is having a "water tight" business case it should be relatively trivial to take up a traditional loan or to raise capital through traditional ways ... but perhaps it's more lucrative to sell "mining contracts" to naïve bitcoin-enthusiasts than to take up a loan. Again, this depends on the naïve investors expectation on the yield from the mining equipment he's renting is much higher than the expectations the mining operator has for the equipment.

The third reason is that the mining operator is trading away risk; they want a stable and predictable income. This is legitimate.

The fourth reason is that it's just a scam scheme and not a real mining operation.

In any case ...

• if some "cloud mining operator" is promising fantastic returns (i.e. above 100% APR) on investment, the real reason is probably that they are running a ponzi scam scheme.
• If some "cloud mining operator" is forecasting a very good return (i.e. 30-100% APR) on the investments, then most likely they're trying to cheat you; their internal unpublished prediction may be a lot lower than their public marketing speach. (It may still be a ponzi scam, though most ponzi-operators tend to operate with fantastic returns in order to lure as many gullible/greedy investors as possible).