I am not discounting your approach because their may be instances where it is useful, just haven’t stumbled across them yet.
Out of curiosity do you just assign an IP address to a wireguard interface or do you assign a subnet and then give client devices an IP in that subnet??
When you say you can connect two clients together, what practical purpose is that used for?? Once folks have an internet connection through the server, they can use discord or a other apps to chat for example so looking for practical examples of why its necessary. I think its not a good idea for users to have a party on your wireguard server LOL, In fact having them on the same subnet if automatically allows connected client users to see each is bad security especially if you have no way of blocking them!!!!
I suspect that having two peers on the same interface WITHOUT an ip address structure probably prevents them from seeing each other automatically but not sure since havent tested it.