OVH definitely doesn't, but this requirement by Hetzner is news to me. Do you know how long this has been in place?

I can't remember that I ever provided it but I heard this a lot. They say that it significantly lowers fraud rates. It's not a legal requirement. Interestingly enough, it's debatable if copies of state-issued IDs are even allowed in Germany (there were courts saying that practices like this are illegal). EDIT: apparently that's legal now, see the answer below.

I don't like the practice but believe their argument, hosting services attract a lot of bad actors and this will probably filter out most of them from the start.

Copying ID cards in Germany has been made explicitly legal in July 2017 through a change of the relevant law.

I saw Hetzner cloud upvoted on here about 3 months ago and I liked the pricing so I tried to sign up, and they asked me to send them a copy of my ID.

So at least 3 months.

I've been using tilaa as a mail host for about ten years now; its a vm/storage provider based out of Amsterdam. I at least tell myself that my data is relatively safe there.

As others have pointed out, encryption is the only real protection.

Unfortunately, you are not supposed to do it yourself because its complicated so you have to find a trusted third party to do it that has been vetted.

But now you have to come up with a system to vet the vetters.

What a complicated world we live in.