Then you have a server rendering essentially 4 or 8 or 32 or whatever individual games, capturing and encoding them to a streamable format, streaming via a socket or webrtc or whatever to the client, who then sees the action, they input a control, the control has to get back to the server to be processed, render the next frame for every client, send them all back, and then the client sees the result of their action.

Doesn't seem elegant to me, it seems like a way to have wildly uncontrollable latency, and have one player's poor connection disrupt everyone else's experience.

I have a Steam Link hardware device to stream games from my PC to my TV over ethernet LAN, and even that can have issues with latency and encoding that make it a worse experience than just playing on the PC.