What problem does Web3 solve?

Okay. So Web3 is next gen of Internet. Blockchain, AI, VR are all part of it. To answer your question, Web3 will revolutionalise how we use Internet.
Blockchain has a lot of use cases especially in banking and cybersecurity but very very early stages. Cannot put a finger just as yet

Web 3 is not an investment instrument, I think you're confusing Web 3 with crypto

Web 3 is the idea of a new type of Internet which is based on the principles of decentralisation, self governance, tamper proof and trustless

DLT or decentralised distributed ledger is a type of process for revising transactions in a decentralised manner

Blockchain is a type of DLT

Crypto is a token that is used for blockchain transactions

In essence, DLTs are a new base layer tech. The idea is to make things faster and better without the end user realising if they're using a Web 2 or a Web 3 based app. Digiyatra, Digilocker, and several government initiatives are being carried out on the chain now

Because of crypto transferable nature, it is also used as a investment instrument because demand and supply affects its price

I think you're doing the rookie mistake of confusing all of them together

Yes there is. And no one will like it. It's CBDC (Central Banking Digital Currency for the newbies).

Since CBDC is traceable to every unit, it is great for governments for tracking businesses, incomes and black money. It's therefore there is a push for using CBDC in countries like China(authoritarian) and India(tend authoritarian) and huge opposition to the concept like US (mah freedom). Whether you like it or not, it is a real product, endorsed by real governments.

Some small startups in India are working to digitise land record using web3 tech, looks promising.

A good example is Helium. It is a RF based distributed mesh network. You can add yourself as a node in the network and get paid in its crypto when someone routes data via your node.

Imagine you buy power to power your RF node from a community of solar power generators who have their own crypto and accept payment in their own crypto.

Are you able to pay from your crypto to their via a defined protocol. Now scale this to 1 million different community service providers from delivery agents to restaurants to farmers each with their own crypto.

Assume some of them go bust, it affects only the businessman who did business with them. Not others.

Now imagine (actually happens everytime) , too big to fail business fails, does it affect everyone. Does the central bank need to print whole lot of money to keep the credit system going? Does it going to affect unrelated entities to deflate their cash?

Now do you see why Govts want to ban crypto outright.

Unfortunately, while this is the original idea of crypto, it has become a speculative tool currently.