The answer for this oddity is within the systemd unit file.
From the documentation:
Takes a boolean argument or the special values “full” or “strict”. If true, mounts the /usr and /boot directories read-only for processes invoked by this unit. If set to “full”, the /etc directory is mounted read-only, too.
– systemd.exec
Immediately after that, we have this line:
Which explicitly grants Caddy the ability to read and write to this directory only. So regardless of the permissions on the host, systemd has made it impossible to write in /etc outside of that location.