You're not totally wrong, but think of it this way. You have native support in your application stack for this static 'caching' along with one-click edge distribution. Which means you can write extremely complex, interactive markup (it's just React) on top of this very simple distribution system. And you don't have to build a whole magic caching system or deal with web servers at all.
I've worked with similar systems to the one you've laid out -- tell me you've never had to jump into the cache to clear it because a client wasn't seeing their updates. Or a page was getting improperly cached. Even if it was simple and effective, it was often a pain.
These days, there are a number of services that will store your html and other static files on their edge CDN servers (cloudflare workers, vercel, netlify, among others) leading to your users downloading the files at remarkably fast speeds. You can reach a pretty amazing TTI while maintaining nigh infinite scalability.
I will say that while I personally use next.js, I stick entirely with server-side rendering. I find it to be a better all-around user-experience for my use-case with several distinct advantages. But I only serve ~150,000 users a month, who are all relatively close to my server and I don't have much static content. A modest ec2 instance handles it with ease.
But if I was building an application that targeted many regions and needed infinite scalability, or one that heavily utilized static data, I'd definitely consider pursuing the approach laid out above.
We've gone 'full circle', sure. Because React offered a way to write web applications in a much more consistent, interactive way than anything before it. But we spent a few years growing our bundle sizes out of control, and improperly structuring our applications which led to TTI growing and everything being slow and clunky. Companies that cared and had good engineering were able to navigate these problems, but your average developer couldn't. Now with a system like this, they can not only match the performance of classic applications, but in many cases exceed it.