Their actions show that signatures aren't actually used in the way you describe. It does say to sign the back of the card, but I've never done so and it's never been checked. Not only do vendors not check, but there's no attempt by credit card companies at getting vendors to check. And they don't check on their end, either. The reason is not just because it's inefficient given the amount of fraud, but also because it's unreliable as a security mechanism.

So clearly, that's not how the signature is actually used. What matters is how it's actually used, which is to help prevent good faith actors from accidentally reporting purchases as fraudulent. That's a valid use, but noteworthy.