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.