Correct. We run it without it and just use the DNS filtering aspect.

For tunnels many of the features basically have to work this way, so I'd be surprised if you could avoid it. It's also impossible to avoid if you use normal Cloudflare "protected" DNS entries. You can use Cloudflare as just a DNS server but it's not the default, by default it will proxy everything through Cloudflare, since that's kind of the point. You can't cache HTTP requests you can't see.