I don't think it's fair that you ignore pretty much the entirety of the 2000s where private servers were the default for gaming, with LAN parties being more a thing of the late 90s and early 2000s. Games like CS thrived on private servers, and the social ecosystem was fucking awesome because of it. It was a renaissance of gaming communities AND a thriving online modding community, with some mods actually becoming full blown games in and of themselves, like Killing Floor for example (and in tragic irony, the devs now don't support modding, but that's a different story).

Even now, private servers are still a thing, but they're a hollow shell of what they once were thanks to the insidious cancer of matchmaking and the mentality that helps promote.

You're thinking too far back, and forgetting that sweet spot that is more than still viable but is actively dis-incentivised by publishers and developers that seek that live service model.