It’s about building consensus for valid transactions. I decide what is valid for my node and will not be upgrading to software that merges this request.

What mechanism is used for this consensus? If everybody has their own pool, how is this building consensus? My understanding of Bitcoin is consensus is built through proof of work and block validation.

From a game theory perspective, this is an IPD (Iterated Prisoner's Dilemma), not a one-shot game—different strategies emerge, especially as the fee-to-subsidy ratio grows over time.