As someone who plays a lot of online multiplayer, there's a few issues. A lot of games do have skill based matchmaking systems (aka SBMM) in place.

Ideally, this would lead to people having a 50% win rate which is just unacceptable to some. Those people resort to smurfing or cheating to get their fix--they don't really want a fair and equal match. Just look to the Call of Duty community crying about SBMM. Those people want to farm clips and play with those worse than them--not people at or above their skill level.

Additionally, many multiplayer games at all but the highest skill levels have most matches determined by the side that plays the fewest number of mistakes. This is especially true of team based games. At most skill levels, both teams will be making many obvious (and less obvious) mistakes. This can frustrate some who believe that they're held back by their team and just need to play with higher ranked teammates. So people will boost or buy accounts or resort to cheating.

Skilled players will NOT benefit from playing with others who are cheating, because their games will adapt to cheaters and not other skilled players.

Cheaters will also easily adapt to ranking systems by creating new accounts or intentionally de-ranking themselves.

Are the skilled players plugged into communities enough that they can just make their own servers? It would be some extra work, but I assume time spent getting to know each other wouldn't feel like a total waste, and might be greatly preferable to dealing with all these rootkits.

This is called "Skill based matchmaking" and it is absolutely something that many games already do. Studies have shown that it increases player retention significantly. But also, there's a chunk of people who absolutely hate on it at every opportunity.

Cheating happens regardless.

I'm not entirely sure if you're being sarcastic or not.

> What if online games track how well people do and sort them into tiers based on skill level?

Games have been already doing this for at least a decade. Games that do this are exactly the games where cheating is rampant.

Honest question. Believe it or not, people who aren't into AAA multiplayer games don't necessarily know a whole lot about them.

KLA isn't about preventing cheaters. It's about protecting the artificial scarcity of products for sale via microtransaction.

Gotcha. So you're saying that it's really about protecting a revenue model with pay-to-win elements?

If that's so, then do we typically only see KLA on games that are mostly funded by microtransactions or live service models?

Pay-to-win isn't really the issue so much as microtransactions in general. Most of these games have an in-game currency to buy stuff (some is pay-to-win, most are cosmetics) and protecting that currency (and the virtual goods traded on the market it drives) is paramount. These games also tend to have moved away from 'community hosted' servers, since these give an opportunity for hosters to hack in features that might be detrimental to sanctioned behavior.

In short, we typically see KLA on games with in-game currencies whose servers are controlled by the vendors.

Inasmuch as KLA is actually used as anti-cheat software, it's usually a proxy for actual moderation (i.e. labor). Community-hosted servers generally develop their own processes and customs for handling bad actors, but vendors generally don't want to hand that kind of power to internet strangers.