Yeah, because the auth can't be done on Tailscale's end if they don't terminate the TLS connection. However, it is still possible to use an authentication proxy in this situation. Many homelab and small to medium size company setups use OAuth2 Proxy, often with Dex. If you wanted to get fancier, you could use Tailscale for identity when behind the firewall and OAuth2 Proxy when outside the firewall.

This may seem like a lot of effort and it is definitely not nothing, but Cloudflare Tunnels also has a decent number of moving parts and frankly their authentication gateway leaves a bit to be desired for home users.

Tailscale ‘serve’ works well at my startup. SSL and DNS still but unlike funnel it’s limited to your tailscale network.