Original IPSec works like this too (in addition to the gateway mode). It's not called VPN, because it's just a feature you enabled in IP - you have the same address etc.
It failed to reach popularity largely because it used X.509 for keys and there was no PKI. And bad UI and NAT and some other nails in the coffin.
But there was point when there was a more or less credible bright future everybody running IPSec, no NAT and IPv6, and you wouldn't need firewalls because you could just configure who you want to talk to using IPSec security policy and strong authentication...
It failed to reach popularity largely because it used X.509 for keys and there was no PKI. And bad UI and NAT and some other nails in the coffin.
But there was point when there was a more or less credible bright future everybody running IPSec, no NAT and IPv6, and you wouldn't need firewalls because you could just configure who you want to talk to using IPSec security policy and strong authentication...