We had a third option in the old days: Play on private servers with your community, or on public servers where the community vote-kicks cheaters. It wasn't perfect, but it did work pretty good.

Unfortunately the industry decided to leave private/player-hosted servers behind, and modern genres like battle royale require unreasonably high player counts, so we're kind of stuck.

The latter is basically how it goes with Counter-Strike 2 which doesn't have kernel level anti-cheat.

Well, maybe not "everyone" is cheating, but there's very little punishment to cheating in that game for those who do. Do it too blatantly and get reported an cordoned off into "low trust" matchmaking, or just closet cheat with total impunity.

I suppose this then drives people to third party matchmaking services like FACEIT that do use kernel level anti-cheat (which has its own separate game culture issues to replace the cheating issue).