If you listen to their earnings call, the CEO emphasizes that he wants Cloudflare to be positioned along side the Big Tech Cloud, not against. But, I think you're right. Cloudflare will slowly encroach into the space of Workers + Workers KV + Pages and double down on serverless + edge compute – chip away at Lambda/App-engine with a gateway type product to offer with it. Currently, they're mostly focused on CDN + ZeroTrust security.
Also they announced acquisition of Vetrix. I've never heard of it but seems interesting that they're venturing into app-level security market as well: https://cloudflare.net/news/news-details/2022/Cloudflare-Acq...
Cloudflare's genius is in offering free CDN service for most solo people. That seems to be like the way Photoshop allowed pirating of the software with little DRM control, get people to use the product first. I wish SalesForce did that, they have no free plan. For my scrappy company, we just use excel sheet for CRM.