I wonder if this tradition of game-specific driver patches has even changed with the modern APIs though. If yes we would eventually see less frequent driver updates (which doesn't seem to be the case so far).
My understanding is yes and no. In the pre DX12 era drivers often contained full replacement shaders for games sometimes. Where the OEM would hand write a replacement that worked better than what the game dev did, potentially on a GPU sku level. They would also potentially completely re-write how sections of the pipeline worked with shims for the same reasons. This was sustainable because shaders were relatively tiny (look at the limitations of DX9 shaders vs DX10+), and the pipeline relatively simple. However moving forwards to DX10+ and shader size explodes, as does pipeline complexity, and shader count. While they still did this for popular titles by special agreement, they largely switched to issuing guidance and providing tools to devs to optimize their games. But the issue persists. Writing shaders for Nvidia's warp system will potentially compromise performance on AMD, Intel etc. So OEMs still do some shims for games when performance is particularly egregious. But with DX12 and Vulkan in particular it's more about having presets for things like you'd find in NVidia control panel and a few game specific optimizations to critical paths, instead of just replacing how that game interacts with the driver completely.
I think we're seeing something related instead. AMD/nVidia have 20+ years of optimizing for specific games in their drivers. Intel doesn't. So they're using DXVK to make up for all the games they don't have the time/resources to optimize for. If this works out for Intel long-term, it would be a huge boon for all of us. It means any future competitors would be able to use DXVK to make up for the disadvantage of joining the game so late.
I think it's just bugfixes now. Instead of updating drivers, nVidia and AMD now work directly with developers to integrate the optimizations into their engines.