You need to understand that Zwift is a stimulus to the body. Like any new stimulus, if you let it adapt, you will get better off of it. So of course Zwift racing will provide improvement.
However, Zwift racing is broken into 3 categories… Length of race, distance of race, terrain of race. Outside of that, Zwift racing provides the same stimulus every single time. You can only manipulate those three variables so many times. The amount of time you spend in Z5-6 in a training session exceeds a opening 5’ of a zwift race. The level of FTP work in a structured session is greater than a zwift race.
Once that stimulus doesn’t provide enough stress, you stop improving. Your body is smart.
Zwift racing will always be hard, but don’t confuse “hard” with “enough to elicit a positive response” to see improvement
This is Basic Training 101 and is why a structured plan trumps doing races on a long term scale (8+ weeks)