Charles must have some wild carveout from apple. All other apps that do that have been shut down. I still run a very old version of adblockios that starts a vpn (proxy) at 127.0.0.1 and blocks traffic that way. mostly.
I think the parental control app Circle does something similar (faux-vpn proxy). When I tried using Circle, it seemed a bit convoluted to me, so we ended up uninstalling it. So, I’m not sure how unique this method is. But, I’m not sure I can think of another way for a network blocking/security app to work on iOS.
This works as long as the app does not enforce certificate pinning. But if it does, there's no way to override it and inspect what's actually going on, as I can on my desktop.
Apple does not block apps from using the network or give you any way to find out what they are doing and who they are talking to.
In fact, apple does the opposite - it blocks apps that let you firewall your phone.