I recall 3 different stages, thermal protection was first designed to save chips if the cooling fans failed etc. It was very conservative because the only option was to turn the system off. SpeedStep was designed to save laptop battery life, so they never needed to thermal throttle in normal operation.
Only fairly recently with Turbo Boost did Intel combine both ideas. It’s actually a fairly clever optimization as single threaded workloads benefit quite a bit from the extra thermal overhead.
The Pentium III was the last Intel CPU where shutdown was the only possible response to overheating, when the CPU asserted THERMTRIP#. The Pentium 4 has bidirectional PROCHOT# and the Thermal Control Circuit, which divides the clock down whenever the processor is hot, and continues to run.
It's also what enables some of the more modern packaging technologies.
Silicon aging is worse at higher temperatures, people are going to kill their 7/10nm chips far quicker if they keep overclocking as they've previously done. But that'll be Big Silicon's fault too, no doubt.
