We have no way of knowing. But as a guess, possibly because MS is trying to use sharepoint as the new "windows" -- the tool around which they cement their monopoly and keep the money train rolling in.

> Why is it not transcoding locally?

We also have no way to know. But as a guess: "because everything now must be 'cloud' as 'cloud' is the new hotness".

> What if i throw it a 4k video?

No idea. Try it and see.

Lastly, you might consider switching to something that does actually run locally, where you are in control. One suggestion is ffmpeg. https://ffmpeg.org/

Try transcoding on the bog standard anemic i"GPU" of corporate desktops and laptops. Not everyone has a 4090.

You have plenty of options out there that will fit your needs. ClipChamp works for many, other solutions work for many.