> assuming a plain database (works as a mental model). In practice I guess there's one dataset which gets filtered out on its way through the network of servers to the user?

Google search doesn't work like this anymore. Search results for everyone are custom based on what they know about your. For example check out filter bubbles[1]. A blacklist would probably help their models. As for why it got removed we can only guess. I'm guessing it has to do with either bad UX (if you forgot you added domains they will never show up) or them wanting to be in full control of your search experience.

[1]: https://www.ted.com/talks/eli_pariser_beware_online_filter_b...