ATM's in the Netherlands cap at 50€ (so any higher denomination must be requested at the bank), due to people using contactless payments frequently there's less incentive for cash. Even then, why did the EU decide to print 100€ or 200€ notes (forget about a 500€ note as they've stopped printing more since 2019 but it is still legal tender). Stores refuse to accept a 200€ note for a 150€ purchase, why do these denominations exist?
We were required to do our initial deposit for a bank account in Germany in cash. Not entirely sure why, but we're immigrants and so we couldn't easily do international transfers yet, nor did we have an in-country account to work with. Having larger denominations for a two month rent security account was very reasonable.
Do we do lots with cash? YES. We have children and they use cash to buy things. Do I use it? Yes. For everything? No. It's about 80% digital, 20% cash. Should I use digital to buy a 1 euro pastry at a train station? No. Why pay the overhead to the bank? Don't bother. Cash works fine. Digital works fine. Have both.