That's also how I remember it. It changed when Facebook became popular around me. Myspace, Tumblr, Twitter (my group of friends had it way before Facebook) were all about "nicknames" and random pics as avatars.

But a strange thing happened with people I knew was that after FB's "Real Name Policy". Anyone who kept using a pseudonym was viewed as outdated at best, sometimes a downright weirdo. Only people part of Twitter/Tumbler niche communities kept using fake names.

I also remember around the 2010s a "friend of a friend" bragging about reporting someone using a nickname to Facebook and having Facebook accept the report and force the person to change.

Interestingly, some teens that I know are sort of going back to that. They don't have Facebook, if they have Instagram, it is just random pictures of objects, more like Tumblr was, no interest in being influencers.