End users switching to Cloudflare's DNS endpoint are doing so because they feel the DNS provider is both faster and more secure.
They rightly made the decision NOT to pass on the end user's IP information to the upstream DNS server. I agree with this decision and they are acting in my best interests in doing so. To draw some kind of nefarious intention from this is absurd.
Until Cloudflare are proven to be nefarious actors, I'll continue to use their service.
In this instance, the upstream DNS server and the resultant HTTP server are operated by the same organisation. Cloudflare have opted to not provide the /24 (or /56 if IPv6) network that the original DNS request came from, in the DNS request. Your computer will then provide the /32 (or /128 if IPv6) that your request is coming from when you connect to the HTTP server.
What privacy win have you gained by Cloudflare not providing that information in this instance?