No, I'm not confused about this, I'm talking about regular old wallhacks/ESP that only requires the client to know about other players position and draw an overlay over the game. To my knowledge Valorant and csgo are the only ones that have done it. And it took what, almost 20 years for csgo to do it?
In their cases it works because they have simple maps and a low amount of entities like players, so its not too much work for the server to do culling so they can hide positions of other players until its needed. But when in close proximity they can be seen through walls, like around a corner you can shoot through (at least csgo has penetration) and to avoid pop-in. And the other players still produce sound so information about other player positions are still sent to all clients and could be used for ESP.
So no, this is not a solved problem, and is only partly so in very few games.
In their cases it works because they have simple maps and a low amount of entities like players, so its not too much work for the server to do culling so they can hide positions of other players until its needed. But when in close proximity they can be seen through walls, like around a corner you can shoot through (at least csgo has penetration) and to avoid pop-in. And the other players still produce sound so information about other player positions are still sent to all clients and could be used for ESP.
So no, this is not a solved problem, and is only partly so in very few games.