My background that made me write the comment above is that I implemented lazy loading for a feedreader in JS, with predictive early loading to exactly avoid this problem, and I did test the browser feature just recently again. In those scenarios lazy loading really does work well enough for my statement to be true, according to my testing. For common connection speeds and image sizes only of course. Though I'd argue it also helps in less optimal scenarios exactly because it somewhat decouples the image loading from the page load - that that overall experience was horrible on long threads with many images in the feedreader was why the lazy loading feature was added, the contrast was stark.
I should have defined that better in the comment above and given your experience more validity. Next time :)
This is an example of what I am talking about.
https://clayimports.com/collections/colors
It "passes" the google lazy load audit, but is a terrible user experience. Doing no image load optimization would be much better than what they are doing presumably to please google.
The typical WordPress lazy loading script doesn't start loading the image until it is scrolling into view. Try a typical food blog, scroll moderately slowly and you'll still get to see every single image load.
edit: your example works great, but is in outlier in the implementation, and benefits from tiny images that load quickly.