Meta confirms it is blocking EU-based users from accessing Threads via VPN

I think Meta has very complex fingerprint service in their backend after all these years. They know what you are doing even when you are not using their service. Their tracking in bundled up in long chains of tracking services over many websites. As long as you use a non vanilla browser to access their service, they might have you in their database from a previous tracker that trapped you on one of the many websites that are selling/trading tracking fingerprints. Since a decade it is not about the IP anymore. You can data-triangulate personas and pinpoint them to an existing user-profile with a very high accuracy. It should be possible to visit the threads service with a VPN and a heavy neutered browser. But then again, if your request is to suspicious in its request (thinking tor-browser, command-line browser, etc.) they might put you as well on a detour for a captcha/recognizer that will look harmless in the fronted ("click all the cars!") but its actual task is processing/scraping a fingerprint from your display-device (browser) that then again can be connected with this suspicious request for the future. I am sure that their VPN block is not 100% blocking Europeans, but will block most of the unsophisticated request from normal users that will just give up after some tries.

Here are some vectors for identifying users (via browserleaks): IP, JavaScript, WebRTC, Canvas, WebGL, Installed Fonts, Geolocation, Feature Detection, SSL certs, content filter.

Edit: I might get some downvotes for this, but iOS has some good protections build into their OS layer (so they say) to make it harder for advertisers to track you. See also this very well done 1 Minute ad showcasing how the modern internet ad industry works.

Probably by just looking at the IP address, either due to the IP addresses of the VPNs being public or by the fact that many users are accessing the service through a single IP address

I imagine they just have a blocklist of IP ranges owned by major VPN providers.

Facebook isn't interested in complying to EU's privacy laws at this point, so they're blocking it off entirely