Hasn't stuff like this been solved with anycast and typical routing algorithms of old etc? Or is this solving a different problem? (This doesn't affect me but have been considering moving some stuff from aws/cloudflare to bunny)
Very few providers offer anycast. It's also kind of simpler to take servers from multiple providers and have DNS be the integration layer between all of those.
Some hobbyists do anycast on their own, but this is more complex. See https://tylerobrien.dev/posts/2022/06/28/building-an-anycast... for example. This also require some advanced traffic engineering: what looks close for BGP may be on the other side of the planet. Relying on DNS only is more accessible.