Has this disappeared for anyone else? This is incredibly annoying and if there's a good reason for it I can't find one and I find it very irritating! Why has GOG removed this incredibly useful feature?

...Okay, let me see if I get this: You're complaining about the issue that owned games keep showing up while browsing the library?

It's a bug. GOG is evidently working to fix it. There are already a few topics about this. All you can do for now is wait.

Press Alt + F4 to refresh the page.

Evil... quite evil. (^_^)

Wait...
Not only was there an obese cat on GOG, allegedly that obese cat also was an incredibly useful feature?
How did I miss that all these years?
And what exactly was that incredibly useful feature, that the fat cat offered?

To answer the OP's question, yes the removal of the option to view only unowned games has happened to me as well.

It's frustrating to go into the Store and wish to see what new games there are added to GoG only to find that all of my current games that I already have are in there with no filter to remove showing them.
This is for the webpage, I don't use Galaxy.

And in advance, no refreshing doesn't make the option appear in any way.