A Server-Side GTM container compliments a client-side container, it does not fully replace it.

Some processing happens on the server, but event data must still be sent to the server-side container first. For now, the "standard" deployment of a server-side is that it receives hits directly from the browser, orchestrated by a traditional client-side container. So the client-side script is still there, just less bloated.

The server-side container has built-in facilities for serving up the client-side container script. Meaning that domain-name blocking will not prevent this. DNS-based also has some issues: Server-Side Containers run in App Engine, blocking them basically means blocking anything running on GCP.