Update 2020-04-30

As of Chrome 81, it is mandatory to pass both --disable-site-isolation-trials and a non-empty profile path via --user-data-dir in order for --disable-web-security to take effect:

# MacOS
open -na Google\ Chrome --args --user-data-dir=/tmp/temporary-chrome-profile-dir --disable-web-security --disable-site-isolation-trials

(Speculation) It is likely that Chrome requires a non-empty profile path to mitigate the high security risk of launching the browser with web security disabled on the default profile. See --user-data-dir= vs --user-data-dir=/some/path for more details below.

Thanks to @Snæbjørn for the Chrome 81 tip in the comments.

Update 2020-03-06

As of Chrome 80 (possibly even earlier), the combination of flags --user-data-dir=/tmp/some-path --disable-web-security --disable-site-isolation-trials no longer disables web security.

It is unclear when the Chromium codebase regressed, but downloading an older build of Chromium (following "Not-so-easy steps" on the Chromium download page) is the only workaround I found. I ended up using Version 77.0.3865.0, which properly disables web security with these flags.

Original Post 2019-11-01

In Chrome 67+, it is necessary to pass the --disable-site-isolation-trials flag alongside arguments --user-data-dir= and --disable-web-security to truly disable web security.

On MacOS, the full command becomes:

open -na Google\ Chrome --args --user-data-dir= --disable-web-security --disable-site-isolation-trials

Regarding --user-data-dir

Per David Amey's answer, it is still necessary to specify --user-data-dir= for Chrome to respect the --disable-web-security option.

--user-data-dir= vs --user-data-dir=/some/path

Though passing in an empty path via --user-data-dir= works with --disable-web-security, it is not recommended for security purposes as it uses your default Chrome profile, which has active login sessions to email, etc. With Chrome security disabled, your active sessions are thus vulnerable to additional in-browser exploits.

Thus, it is recommended to use an alternative directory for your Chrome profile with --user-data-dir=/tmp/chrome-sesh or equivalent. Credit to @James B for pointing this out in the comments.

Source

This fix was discoreved within the browser testing framework Cypress: https://github.com/cypress-io/cypress/issues/1951