How notch traversal works on MacBooks

Tailscale now has a full windowed UI. Before that, our app had to learn how to tell you it was hidden by The Notch.

I haven't had enough menu bar icons to run into this but is it really the case that the notch just hides whatever icons happen to be behind it? Like, the OS doesn't handle this incredibly obvious edge case? Why not just put an overflow dropdown next to the notch (something Windows XP managed to figure out)? I know software quality has been going down in recent versions of macOS but this is absurd.
This is genuinely shocking that Apple is not handling that. Talk about quite a decline in one of their flagship products.
Hasn't menu bar applets crowding with no official overflow menu been a problem with MacOS with an obvious solution (add an overflow menu) for... 2+ decades now? I know third party solutions exist and it's kind of an edge case, but still, I remember encountering this back in the day on my ancient plastic Macbook.
It's much worse than it used to be. Before it was only really a problem with apps with a lot of menus, and you could access the items by switching to an app with fewer of them. Now, the notch takes up a lot of space, and you hit it really soon on a 14" display—I can only have maybe three third party menu applets on top of my collection of built-in ones before they disappear into the notch.
I think it's not just the notch, but that menu bar icons are more widely spaced than they used to be. I want to say it happened around Sonoma (10.14)? I was working on a Mac app at the time. Icon styles went from dense with a generally square clickable area to widely spaced, wide rectangular clickable area, and a highlight with rounded corners when clicked.