Yes, sharing IP addresses is needed for P2P communication to work so enabling this blocking option would also block legitimate uses of WebRTC such as video chat

Yes, sharing IP addresses is needed for P2P communication to work so enabling this blocking option would also block legitimate uses of WebRTC such as video chat (e.g. https://talky.io https://talky.io , https://appear.in https://appear.in , etc.) and low-latency data sharing.