I think some of the euphoria around tracking tooling in the repo is "yes, now I can run a command in the repo and it's as if I spun up a docker container with the CI locally, but it's just regular software running on my machine!" This is a huge improvement if you're used to the minutes-or-hours-long CI cycle being your only interaction with the "real environment."
The reductio ad absurdum that you describe is basically "a snapshot of the definitions of all the container images in our CI pipeline." It's not a ridiculous example, it's how many large projects run.