The thing I find interesting about CDRT and OT is it’s built to solve people typing in the same paragraph at the exact same time, which is something that very rarely happens in my experience. (Talking about text based collaboration aspect)
It's funny you mention that, because 4 days ago I wrote a blog post about exactly that: https://docnode.dev/blog/text-conflicts
You need OT or CRDT because otherwise you'd have LWW over the entire document. However, I agree that resolving conflicts at the character/letter level isn't the best idea. Doing it at the node level is a more reasonable balance.
Not sure if helpful, but..
Ive found that systems which _don't_ support this often end up accidentally putting people's cursors in the same sentence/block (resulting in one or more editors losing content or wasting time trying to get detached from the other cursors)