Hi Jamal,
Great diagram! I just wanted to clarify just a couple things. When you publish to ArcGIS Server, you do have the option to copy the data or register the data source so the data is referenced to the source database from ArcGIS Enterprise. However, with ArcGIS Data Store, there is no option to publish the data as a referenced item, because the ArcGIS Data Store is not a "user-managed" data store like how SQL Server is, for example.
An advantage of having a registered data store is to keep the data in a multi-user enterprise geodatabase where you have control over how the data is configured & managed. When data is published to the ArcGIS Data Store, the data is copied to the ArcGIS Data Store and is inherently managed by ArcGIS and gives you the "Hosted" layer type. The ArcGIS Data Store option is also useful if users don't have much experience setting up and maintaining an RDBMS. There are several different types of ArcGIS Data Stores too, such as the Tile Cache Data Store for hosted scene layers and the Spatiotemporal Big Data Store for real-time data, just to name a couple.
When data is Hosted, you have settings within the item's Item Details page that you can enable and disable depending on your needs. When you publish data from a registered data source to ArcGIS Server, you're limited to certain settings because those settings are to be configured within the source database, rather than within ArcGIS Enterprise.
Take a look at the following resources:
I hope this helps!