It's not auto-granting anything which wasn't already allowed before Android 17. Local network access now requires having a Nearby Devices group permission.
Apps targeting Android 17 can't access the local network by default without requesting Nearby Devices.
Apps not yet targeting Android 17 are granted a partial Nearby Devices mode by default where local network access is permitted but nothing else.
All you did is revoke the local network access which you couldn't before.