You do have to have the cup to use the Freestyle machine. I presume it reads a chip in the bottom of the cup?
The cups are insulated so your ice lasts longer, which is nice. I agree they’re a pain to lug about sometimes.
But on our Rotterdam cruise March 2023 the Freestyle machine only worked with Diet Coke for a few hours of the 10 days we were onboard. We were sailing with friends who usually sail Royal Caribbean (their first HAL cruise) and they said the newer RC ships -known as “Apartment Buildings of the Seas” by some folks- have multiple Freestyle machines and almost always worked.