Applications of transistor feedback
The particular circuit you are referring to might well be used in real life.

Think of your circuit as the output stage of some amplifier, where your load is RD2.

You can omit Rf entirely and be happy with it, but at a certain point you decide that you want to limit the current that flows in the output transistor, M2.

You add Rf and size it so that when your limit current is flowing into it, the voltage across it is the threshold voltage of M3, i.e. when output current is at the desired maximum, M3 starts to conduct.

What happens if M3 turns on? It pulls current from the Rs M1g node, pulling down that voltage, turning M1 a little more off, turning M2 a little more off, effectively limiting the output current.

Now, of course this loop might not be stable or fast enough for the circuit purposes, but at least in DC it is doing its job.

A little bit of amarcord:


image courtesy of https://www.ibiblio.org/kuphaldt/electricCircuits/Semi/SEMI_8.html

Beware of the mighty uA741!

Have a look at the output side: see Q15? When too much current flows in R6 the transistor is turned on, steals some of Q14 base current and limits the output current. And Q21 is doing a similar trick, in a more convoluted way, by means of Q24-Q23 mirror.