Function boundaries do make things fundamentally more difficult than basic block boundaries, for a large number of reasons. You can no longer have single definitions of values and updates to those values are not global updates for the entire program. This is why you need stuff like context/object sensitivity for interprocedural analysis but it doesn't matter for local analysis. Graph structures also become way more chaotic, preventing the nice efficient lattice movement you see in classical local fixed point computation.
Like, static analysis and compilers is my job and none of my colleagues would use this term this way.
But clearly there is some material using it that way. Weird. I've been wrong before and I'll be wrong again in the future. So I'm happy to be wrong here. Clearly there are some situations where "global analysis" is used to describe whole-function analysis.
Regarding the difference for interprocedural analysis: I'm not entirely sure I follow it unfortunately. Let's say you can do everything within a function. Can't you just inline all of its callees (at whatever depth you want) and do your analysis/optimizations based off the result of that? Inlining itself is a rather trivial mechanical transformation, and after that everything is inside one function again, which you can already handle. The only real obstacle here seems to be recursion, but if you just treat that as any other opaque function call that you can't optimize across, you should otherwise get the rest of the way there, right? What am I missing?
In practice, these structural differences require new approaches. The field has done a really good job at intraprocedural analysis, solving a lot of really important problems many decades ago. How to do fixed point computation over SSAed CFGs is well understood, even when you've got heap relationships to think about. Interprocedural analysis still largely sucks. Even modern approaches like CFL-reachability for dataflow analysis produce a ton of garbage. This is one reason why I say it is just harder.
As you mention, recursion prevents you from inlining everything into one giant function. You do get "the rest of the way there" by inlining to some depth limit in the sense that inlining is a way of achieving context sensitive analysis (though it is generally not preferred). But you've still got big problems at the points of mutual recursion (either you need to widen badly or you need to actually do interprocedural analysis) and your program is also exponentially larger in pathological cases.
Also, I don't think they're alone in this terminology either... see here: https://www.csd.uwo.ca/~mmorenom/CS447/Lectures/CodeOptimiza...