One rack is generally going to be well more than enough for a persons inference needs.
They want to put a million of these up there long term, where are you going to find space for a million individual racks? Now it's a large datacenter again.
I did see one thing about a company adding a cluster or something to someones house and giving them a cut of it. That decentralizes the power distribution, and space requirement, but it adds other problems like vandalism / theft as how well can you protect a thing tacked onto the side of a house worth 10s of thousands of dollars.
Edit: And you don't fix or upgrade them, they deorbit in ~5 years, and get replaced with the next best thing. Radation protection to avoid bit flipping will be a cost issue, but they already have hardened chips that work in space, so I'm not sure how much new technology is needed, and starship can lift a shit ton of weight, so heavy shielding is possibly an extra option?
Edit2: Just to be clear, I'm not trying to say they are going to earn enough revenue to make these things profitable like they did with Starlink, I'm just talking about the technical specs of what they say they're going to do. There's a lot of misconceptions about what they even intend to try putting up there.