You’re saying it like you found a loophole or something but it’s not a gotcha. Yes, if you manipulate sensitive data you shouldn’t use Google Docs or Photoshop online (I’m not imaginative enough to think of a case where you would put sensitive data in Photoshop online though, but if you do, don’t) or host your emails in the cloud. I’ve worked in a moderate size company where everything was self hosted and it’s never been an issue
Doctor-patient or lawyer-client confidentiality is slightly more serious a matter than your examples. And obviously it’s one thing for you to decide where to store your own things and another thing for someone else doing it with your confidential data…
Google Docs and Photoshop Online have offline alternatives (and if you ask me, native MS Office is still the golden standard for interoperability of editable documents), and I use neither in my work or personal life.
Email is harder, but I do run my own email server. For mostly network related reasons, it is easier to run it as a cloud VM, but there's nothing about the email protocol itself that needs you to use a centralised service or host it in a particular network location.
MS Office is just one login away from storing documents in the cloud. I bet tons of users have their documents stored in OneDrive without realizing it.
