They do (well partly), but with network level blocking you end up with broken DOM elements (like images, videos, etc.) The good think about the browser extensions is that they clean up the DOM and in many cases you wouldn't even know if the pages had ads.

Then there's also Javascript trickery loaded with the page that do hostile things if ad servers aren't reachable, and extensions know how to detect and replace them.

I think the closer the blocker is to the user, the higher the fidelity of the blocking.