I buy physical whenever possible, except for Destiny, because I play that game over the course of years. That means there's not much resale value, and I want the convenience of not having to swap out the disk. I think I bought one other game digital at some point, but I can't remember what it was.
As for buying a digital only console... I haven't done so yet. However, I think there's a good chance that I'll get a Series S at some point to put on a secondary TV, as a supplement to my Series X that will be in my primary gaming space. With Gamepass, and my Destiny playing, a digital XB may make sense for me.
I am planning to start this gen with XB, and will add a PS5 in some time later. Depending on the pricing of the SKUs at the time I decide to buy it, there's a chance that I'll go for the digital-only option. Presumably, this will be a machine for playing Sony exclusives (if it pans out that XBSX is the generally technically superior machine, that'll be my multiplat console). In this case, saving $100 on the front end may be worth it, if I'm only going to buy 10-12 games over the life of the machine. Also, at that point, a couple years into the generation, the early exclusives will be cheap to purchase digitally during sales. So, that eliminates some of the incentive to buy physical.