Just as a data point, metrics.icloud.com is on my blocklist from StevenBlack/hosts/master/hosts; it is also one on my top 10 blocked domains. I have several Apple devices (phones, tablets, TV devices, etc.). Despite this domain block, I have no adverse effects using any of my Apple devices.
My uneducated speculation is this domain is used to collect...metrics...for Apple that are not otherwise needed for correct function of the devices. This domain has always been blocked in my use of PiHole over several years, and has never caused an apparent problem with my usage.
The Private Relay setting is another matter entirely; it is a relatively recent addition to Apple products, whereas I believe metrics.icloud.com has been around for much longer.