This is just done to make it easier for humans to navigate, since we are generally more interested in the total balance of bitcoin at each address as opposed to the balance of each individual UTXO. At a protocol level, the inputs to each transaction are selected based on the outputs of previous transactions.

The block explorer blockstream.info will instead show each input as "TXID:Index", rather than as coming from a specific address. For example, if we take this transaction: https://blockstream.info/tx/435656e0e95952ff44df53906625be446451fd6fb3f1a051c14e491bd917043d. The first input to that transaction is the eighth output (7) of the transaction with hash 3227e..., the next input is the 34th output (33) of the transaction with hash 46d7e..., and the last input is the first output (0) of the transaction with hash c6277....

You also might find this a useful resource: https://learnmeabitcoin.com/technical/transaction-data