And how are people buying/trading bitcoin now if they don't want to use third-party exchanges or custodial wallets?
You can make or take an offer in the currency exchange section of the forum, that is of you see someone ready to trade with you using your local currency, you must also do your own research and trade with only reputable users. However, you can also trade on p2p exchanges like bisq, agoradesk and
others, these p2p exchanges connect you to other traders while you remain in control of your funds and do not have to do any kyc.
and am curious if there are any OG bitcoiners out there who can tell me how it worked before bitcoin got big.
In a purely p2p way, as it was designed to be.