Why is vertical scaling expensive?
In some cases (perhaps most) the servers are already at capacity physically.  An increase in the number of CPU's would require a motherboard swap.  To add RAM to an existing server could be expensive, depending on how old the server is.  Memory modules more than 5 years old and sourced from a dealer can be prohibitively expensive.

What all this amounts to is that upgrading from an 8 processor box with 32GB RAM to a 64 processor box with 128GB would involve purchasing an entire new server to replace the old one.  This is still vertical scaling from the database/application point of view.  A server that supports this many CPU's is likely far more expensive than 7 servers with 8CPU's each (keeping the original one as the 8th).

As per mustaccio's comment: High-end hardware is not just about more processors and RAM; designing hardware to support throughput and power/cooling requirements for dozens of multicore processors is far from trivial. Thus, a 256-core 2TB RAM server might cost $150000, which is about an order of magnitude more expensive than 64 4-core 32GB commodity servers