I guess their thought process is, both alias and non-alias accounts use @icloud.com

You were always able to reserve a normal icloud email address just like you would a GMail account, so banning all icloud email addresses would be banning non-alias Apple customers

That being said, I'm not convinced anyone who wanted to ban aliases couldn't have already. The alias emails look weird enough I'm guessing you could ban them with few false positives.

Before, the emails were "me@icloud.com", the default for all apple users. There was no way to distinguish normal emails from generated private emails.

Now, they will be "blah@private.icloud.com", so it will be easy to ban the generated/private email that reduces the ability to associate logins across services.

Unclear why Apple would shoot themselves in this way; I hope it's not Ternus complying with anti-privacy.

Apple was generating (something)@icloud.com whenever you used that service. Now, it will use (something)@private.icloud.com instead. So you can ban this subdomain instantly, knowing people will be "hiding" with this service by default.

It's like blocking anondaddy, simplelogin etc but not protonmail.

Unfortunately sometimes we are at some specific provider’s mercy for whatever reason like lack of appropriate alternatives.

Hide My Email isn’t particularly related to apps. You can use it for any web form that asks for your email address, or any email you send using Apple Mail.

You can use Hide My Email on any website though, whereas Sign In with Apple is limited to just those websites and apps that support it. Sign In with Apple isn't nearly as popular on the web, so it's a lot easier to just ban "@private.icloud.com" from your web service there.