Google explains the purpose of server-side tagging here: https://developers.google.com/tag-platform/tag-manager/serve...

The main benefits are performance and security (performance because the tagging can be online with other resource requests, so user agents aren't pausing on additional requests to third-party resources).

This system is giving site owners a fancy way to do analytics they could build into their own server. Hardly evil as long as it's disclosed and managed in a GDPR-compliant fashion.