My parent’s have their ONT inside a basement cabinet, where all the house ethernet cables terminate. One of those cables runs up to their office, where the main Wi-Fi router is located (Plume homepod provided by their ISP).
Could they setup their network similar to what’s shown in the diagram where the WAN and LAN traffic passes through the same ethernet cable? If so, are there any specific network settings that should be enabled to prevent any issues?
As others have said, this can absolutely be done, it’s commonly referred to as a router on a stick if you’re trying to do research.