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Demo files work, but I'm talking about spectating live. The "Watch" tab was removed and the ability to just browse and spectate the top games currently being played.

I'm sure the technology still exists in the engine, but it's no longer the key feature it once was. HLTV/GOTV was launched with some fanfare back in the day.

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Guessing too much potential for abuse if the same server was handling both match and spectating.
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Spectators don't watch the game on the same server that's hosting the game. The host server sends the traffic to a 'relay' on a delay, which spectators then connect to. Similarly for the HTTP streamed games, the game server is writing the data for spectators on a delay.
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Absolutely crazy they haven’t revived this yet given the popularity of streaming.
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