"Ethernet LAN don't have neighbors. (Mesh and token ring nodes do.) All Ethernet nodes are connected to a hub or switch. All computers downloading from the WSUS machine is the same as all computers downloading from each other. Even when there are two or three hubs and switches between WSUS and its clients, WSUS is still more efficient than DO. After all, DO relies on a server on the Internet, in which case, there are definitely many, many, many more intervening hubs, switches, and routers. And while DO can download from LAN peers, most of the times, it does not. By the way, I install Feature Updates on my own terms. Not even WSUS is allowed to download them."
Hi The_Smart_One the term "neighbours" can have different meanings and there are different settings in the GPO to define what a neighbor is for DO.
This can be a subnet, a domain, DHCP Options (since 2004, 20H2), etc.
I would be interested if you can revisit 2004 ADMX DO settings.
More information:
Impacts and optimization of DO
https://techcommunity.microsoft.com/t5/windows-it-pro-blog/measuring-delivery-optimization-and-its-impact-to-your-network/ba-p/301809
Guide to use DO together with WSUS (german), for en-us you might want use Chrome or new Edge.
https://www.windowspro.de/wolfgang-sommergut/delivery-optimization-uebermittlungsoptimierung-zusammen-wsus-nutzen
using DO with Intune and Connected Cache
https://oliverkieselbach.com/2020/03/07/delivery-optimization-with-intune-and-microsoft-connected-cache-mcc/