This would be correct if you are terminating ssl at the proxy and it’s just passing it to http. However, if you can enable SSL on the service it’s possible to take advantage of full passthru if you care about such things.

So from my experience you generally will have different zomes of security. Outside Internet is obviously entirely untrusted so block every incoming connection except those you really need, and even then ideally all remain blocked (especially for a home network). Then you generally have your guest network which might need access to some hosted resources but is largely just used by guests to connect to the internet, next is your client network where your computer likely lives which probably gets access to all hosted resources but no management access (or depending on how much you want to trust your primary PC, limit that to just your main PC) and finally your datacenter network where you hopefully trust everything running in there.

You generally work with these zones and write rules based on the zone the traffic is coming from, with some exceptions, such as I might not want to give the guest network any access to my data center network, except for access to my jellyfin so I’ll create a rule allowing only tcp web traffic from that network to a specific port on a specific IP/hostname.

A common way to achieve this is with a DMZ network, a network that sits between all of your networks and relies heavily on routing and firewalls. Public services and routers get IP addresses on the DMZ, and your firewall only allows specific paths. The outside Internet can open connections to the web ports of the web server and nothing else, the web server can’t open connections to your other networks, only specific machines/networks are allowed to access the SSH port of the web server, etc. the DMZ is where trusted and untrusted connections mix, hence why its named after the zone that belongs to both North and South Korea where both are allowed but also neither are allowed, where one only goes with specific purpose and explicit permission

I was a bit hesitant to do firewall rules based off of IP addresses, as a compromised host could change its IP address

Realistically any identifier you can write firewall rules based off of can be forged in some way. A rogue machine can change it’s host name, IP address and MAC address (and many do randomize their MAC address these days) in enterprises this is generally mitigated through limiting a network to only Ethernet access or via 802.1X authentication on WiFi and potentially even Ethernet. (You can also take the approach of MAC address whitelists, and some switches even allow for “sticky” MAC addresses where the first MAC address that connects is whitelisted until either the switch is rebooted or an administrator explicitly clears/allows the MAC address)

However, if each host is on its own VLAN, then I could add a firewall rule to only allow through the 1 “legitimate” IP per VLAN

You could go crazy and do everything at L3 (which your idea is basically doing but with extra steps) but that sounds like far more effort than it’s worth, since now you’re making every client also act as a router, and you lose a ton of efficiency both in configuration and in routing & switching, plus you’ve now changed the type of threats you’re vulnerable to.

Generally in the enterprise, risks like what you’re trying to mitigate are handled through reporting. An automated alert email is sent when a new device connects to a network that should never have new devices connect to it, then you kill the connection and verify with the team of that was any of them and investigate if it wasn’t.

Realistically as a home network your threat model is automated scripts and maybe a script kiddie trying to get in. You really just need higher than average security to mitigate such a threat model (and average security is a shit show)

I feel like I may have to allow a couple CT/VMs to communicate without going through the firewall simply for performance reasons. Has that ever been a concern for you?

Security is always a trade off of convenience and speed. You have to decide what is an acceptable compromise between security and efficiency

Generally anything virtual when you aren’t sure what to do, you should look at what the physical solution would be. For example, network storage is very bandwidth intensive, latency sensitive and security intensive. This is usually secured at the physical level as a separate network with no routers so that most security can be disabled. So at the virtual level these would be tackled with a separate virtual network connected to a second interface, and firewall rules on other interfaces to disallow incoming and outgoing connections to the storage network

Edit: I just realized I never answered your first question. In short, from what I’ve seen most enterprises put one firewall from a vendor like Fortinet, Zscaler, Palo Alto, etc. right on the edge of the network closest to the internet then either entirely rely on that for firewall or rely on that for firewalling off the outside Internet then do additional firewalling with a different tool inside the network. For example, a bank I worked at had a pair of redundant L3 switchs (Nexus N9ks specifically) which handled all of the routing for all of the bank’s networks, and connected between those and the internet was the Fortinet box which was managed by an outside vendor and while i was there as part of hardening ahead of a scheduled red team audit we setup firewall rules (I’m blanking on the Cisco term for it, but they’re ultimately just firewall rules) on the L3 switches to limit access to more sensitive networks and services