If IP is used for security, then every public IP is the "proxy net".
At some point, bouncing off some non-service IP (cable modem, etc) will be implemented like seti. It's easy to create a vpn mesh where the client enters in at a few entry points but has millions of exit points.
It's a fruitless endeaver to try and implement security at the routing layer.
In the event of a DDoS attack how else would you do filtering other than the IP address?
If you try to actually serve a page to check the user then the DDoS has already achieved what they wanted, put load on your network connection and server.
Yes since proxies are these days hosted at home (be it willingly or botnet victim, or just ISP NAT) that means IPs are less of a definitive identifier. But they are still a very useful identifier since you can't just spoof a IP on the internet without actually having some sort of access to that IP, trying to do so will confuse the routing and make it throw your packets into the void. Before they might just outright ban an entire IP range since these people would usually rent a server with a super fast connection, hence it was a specific ISP range.
These days you have to run statistics on every individual IP address to check for a suspicious traffic pattern. Someone like CloudFlare has a massive amount of traffic route trough them so they can collect a lot of data points on pretty much all the actively used IPs on the entire internet. Hence when someone wants to open your web page they can do a very fast lookup in a table of what that IPs recent history was. If it looks fine the packet can instantly be forwarded on to your actual web server (very important for how much traffic they have to deal with), but when the statistics start looking off they capture the request and serve up the verification page. Failing the verification page puts even more bad rep on your IP.
They can build up historic knowledge of what certain IP ranges look like, so they can identify public proxies or ISP NAT ranges and so classify the statistics appropriately.
Is it perfect? Certainly not, but it is a very fast first layer of defense to filter down the traffic for all the more advanced methods that follow.
Problem is that on a small website a legitimate user refreshing the page to try and get in can be identified as a bot. Just because they pass verification one does not mean you can trust them. Botnet operators are smart and might switch to more high effort methods of actually rendering the page in a browser to mimic a user or even develop automated captcha solvers so that the IPs they do control don't fall too low in reputation. They want to keep the IPs reputation just high enough where they can keep doing the cheap fast raw HTML only grabs