I guess this is nice for small projects, but for larger ones, the ”zero-API” model seems to prevent team member specialization and force everyone into full-stack mode. Why does the frontend dev need to know database internals?
What is "full-stack mode" specifically? Do you mean the fact that each dev needs to run all parts of the application locally? You'd want that for most small and medium size web projects anyway, even if it e.g. consisted of stricly separated SPA and REST backend parts.
With very large projects/teams there are obviously challenges. My gut feeling is that a project started with a framework like Blitz would probably naturally evolve into some kind of a monorepo, which of course comes with both strengths and challenges. If you get that far though it'd seem to me that the full-stack architecture worked really well for the problem.