Hey there.
There are a ton of options out there for ETFs and Index funds. Deciding whether or not to buy them strictly depends on your investment style and goals.
A situational example would be a Canadian investor looking to gain exposure to the world or US markets. They have a portfolio of Canadian stocks, but don't want to exchange their CAD for USD in a weak Canadian dollar environment, and don't really know enough about the US or world economy to go out and pick individual stocks. So, they look to an ETF that trades in CAD like XUU, which is an index fund that tracks the markets down south.
Or, they'd like exposure to a particular industry but don't want to be "wrong" in their eyes and pick an underperforming stock. So they may buy an ETF that tracks an individual sector. An example of this would be the Canadian technology sector. A lot of investors want exposure to the sector but don't know which individual stock/stocks to pick. So they instead buy XIT, which holds all the major Canadian tech companies like Shopify, Constellation Software, CGI Inc, OpenText etc.
Index funds are a great way to gain exposure to the whole markets, about as close to set and forget as you can get. However, during bull markets there is a chance of underperformance. An example would be our Bull list last year had returns of just shy of 40%, while the TSX gained just under 20%. Keep in mind, gaining 20% in a single year is nothing to be upset about though.
There is also the potential to face the full wrath of the markets in the event of a crash. Owning individual stocks like Fortis, Dollarama, Telus etc would have protected a portion of your portfolio from the extensive losses of the TSX at the peak of the crash (around 38%.)
There are probably equal pros and cons, which is why it is strictly the individual investors choice. Hope I've helped though!