(geoblocking plugin author here)
Yes, the geoblocking plugin stops requests at the application level, although it does that in a very early stage. The reason for this is that it was designed to show a user-friendly error page, so it must be able to load the Discourse assets and show that page. It also logs any blocks to /logs if configured to do so.
Other advantages of this approach are the ability to configure the blocked countries and networks from within Discourse and the ability to not just block the access but to force moderation as well.
If you’re concerned about log inflation or CDN bandwidth consumption the plugin is not for you, but TBH I don’t think these two things matter a lot.