It is considered strictly necessary under GDPR, yes, because TCP/IP (and UPD) is how the internet works.
Something being "strictly necessary" under GDPR also doesn't mean that each intermediate entity can do whatever they want with the IP address.
> which establishes an encrypted tunnel to your main servers
Grandparent was talking about "packets travelling through various different countries". This is just TCP/IP. Using a tunnel won't change this, intermediate routers will still see your IP. Your idea is no different from HTTPS.
If you don't want intermediate routers seeing your IP you have to lay 100% of the infrastructure between the customer's house and your website. Again, this is not how the internet works. And GDPR already covers potential privacy issues that might arise in this case.
> The difference is that now your IP is what all the intermediate servers see instead of user's private data (your user's IP address).
Nope. Your IP is also visible by each router in-between when using such a tunnel if the machine is in the user's network (in your Amazon Echo or Google Home). You need alternative infrastructure to bypass the internet.
Installing a machine directly in the ISP building is no different from Carrier-grade NAT that is already widespread. It also leaks some data about you that can be deanonymised. It is also extremely expensive.
Something being "strictly necessary" under GDPR also doesn't mean that each intermediate entity can do whatever they want with the IP address.
> which establishes an encrypted tunnel to your main servers
Grandparent was talking about "packets travelling through various different countries". This is just TCP/IP. Using a tunnel won't change this, intermediate routers will still see your IP. Your idea is no different from HTTPS.
If you don't want intermediate routers seeing your IP you have to lay 100% of the infrastructure between the customer's house and your website. Again, this is not how the internet works. And GDPR already covers potential privacy issues that might arise in this case.