"keep your drive" option is for people that need to physically shred their drives when they fail. Many financial organizations utilize this policy and document it in their SOC1/SOC2 controls and sometimes in their customer contracts. I was in a cloud provider that did this with over 50k servers.
Indeed. In our case mobile shredding services would pull up to our datacenters around the world and DC Operations would bring them out on a cart. They scan the serial numbers and then same deal, into the machine, out as tiny specs of metal.