It's possible to calculate what information should be available to a client at a given time (and within of the motion range of the clients' latency), only send that data, and calculate the time delta between when a player should have been able to know something, and when they reacted to it.

A lot of games used to do that in the past, and some still do.

But it requires powerful servers. Gamers could self-host dedicated servers, but publishers put an end to that as it's not compatible with micro transactions.

Developers could host servers, but that's not as profitable as using p2p gaming where a random client is used as the server.

It's a self-made problem really, none of this was necessary.