I don’t think this is about competing with Cloudflare. Google Domains is good-enough and likely better for most of their users than Cloudflare, if only because they already have a Google account and know the brand.
Cloudflare’s core business is being the front end of your web presence. They provide DNS and CDN services, so bring a registrar is a natural fit because it provides the last thing you need to keep your web site online and secure. There’d be demand for a registrar just because that’s what prevents domain takeover attacks on the first part of that security chain.