My bad - I'm a bit too into the topic and sometimes forget what other people might not know ^^;

You're missing the part where (c) is forbidden by design of the filesystem, because ZFS is not just "Copy on Write" by default (like BTRFS, which has in-place rewrite option, IIRC) nor LVM/disk-mapper snapshot which similarly don't have strong invariants on CoW.

ZFS writes data to disk in two ways - a (logically) write-ahead log called ZFS Intent Log (which handles synchronous writes and is read only on pool import), and transaction group sync (txgsync), where all newly written data is linked into new metadata tree, sharing structure with previous TXG metadata tree (so unchanged branches are shared), and the pointer to the head of the tree is committed into on-disk circular buffer of at least 128 pointers.

Every snapshot in ZFS is essentially a pointer to such metadata tree - all writes in ZFS are done by creating a new snapshot. The named snapshots are just rooted in different places in filesystem. This means that sometimes even in case of catastrophic software bug (for example, master branch had for few commits a bug where they accidentally changed on-disk layout of some structures - one person ran master branch and hit that resulting in pool that could not be imported... but the design meant they could tell ZFS import to "rewind" to TXG sync number from before the bug)

Updating the blocks in place violates design invariants - once you violate them, the data safety guarantees are no longer guarantees. And this makes it into minimally offline operation, and at that point the type of client that needs in-place defragmentation can reasonably do the two-space trick (if you're big enough, to make that infeasible, you're probably big enough to easily throw in an extra JBOD at least and relieve fragmentation pressure).

To make latter paragraphs understandable (beware, ZFS internals as I remember them):

ZFS is constructed of multiple layers[1] - from the bottom (somewhat simplified):

1. SPA (Storage Pool Allocator) - what implements "vdevs" - the only layer that actually deals with blocks. It implements access to block devices, mirroring, RAIDz, draid, etc. and exposes single block-oriented interface upwards

2. DMU (Data Management Unit) - An object oriented storage system. Turns bunch of blocks into object-oriented PUT/GET/PATCH/DELETE like setup, with 128bit object IDs. Also handles base metadata - the immutable/write-once trees for turning "here's a 1GB blob of data" into 512b to 1MB portions on disk. For every given metadata tree/snapshot, there is no in-place changes - modifying an object "in place" means that new txgsync has, for given object ID, a new tree of blocks that shares as much structure with previous one as possible.

3. DSL / ZIL / ZAP - provide basic structures on top of the DMU - DSL is what gives you "naming" ability for datasets and snapshots, ZIL handles the write-ahead log for dsync/fsync, ZAP provides a key-value store in DMU objects.

4. ZPL / ZVOL / Lustre / etc - Those are the parts that implement user-visible filesystem. ZPL is ZFS Posix Layer, which is a POSIX-compatible filesystem implemented over object storage. ZVOL does similar but presents emulated block device. Lustre-on-ZFS similarly talks directly to ZFS object layer instead of implementing ODT/OST on top of POSIX files again.

You could, in theory, add an extra indirection layer just for defragmentation, but this in turn makes problematic layering violation (something found at Sun when they tried to implement BPR) - because suddenly SPA layer (the layer that actually handles block-level addressing) needs to understand DMU's internals (or a layer between the two needing bi-directional knowledge). This makes for possibly brittle code, so again - possible but against overarching goals of the project.

The "vdev removal indirection" works because it doesn't really care about location - it allocates space from other vdevs and just ensures that all SPA addresses that have ID of the removed vdev, point to data allocated on other vdevs. It doesn't need to know how the SPA addresses are used by DMU objects