maybe? I'm wasn't even sure what databricks was until I looked it up. I might not be the right person to answer this question, so you might need to narrow down what your audience is :)
My POV comes from academia. Our data is rarely in any sort of database, and is often just in various files we have to parse or otherwise ingest and analyze. So the notebooks tend to live next to the data (on our laptop or maybe a group server).
As an aside, academics often have a very hard time paying for services. Universities want to get involved in any sort of recurring subscription, get the legal department to look at the contracts, maybe even negotiate, etc. This is true even for $10/month. So we often look to do things locally ("shadow IT" is kind of a related phenomenon).
However, researchers and data analysts in private industry probably have a very different way of working, so don't take this as gospel. But as for your original question, yes, many many scientists use jupyter locally.
