As long as proxies remain transparent to services, I see no problem. It becomes a problem, when proxies are getting smarter in terms of providing cross cutting features, like routing on payload level (not speaking of message headers) or do authentication and authorization on a per-resource level. That puts constraints on how services are built in this particular environment.

But I see the logic behind approaches, developed by Netflix, and now Istio. If you have a lot of services, orchestration and more central communication management is probably a good way to govern, if the constraints (described above) are accepted and services still have the ability to opt out and pursue a different strategy.

The old SOA world was driven by governance. This was a result of the general engineering methodologies and mindsets of this time. Still, API Gateways / smarter proxies / etc. could bring that back...