So we should kill a couple of hundred thousand people every decade or so to keep our game up? Seems pretty indefensible. I'd rather invest a much smaller amount of money into honest red team war gaming.

I said they're useful, I don't agree or advocate the strategy. Like it or not (I do not) small regional conflicts teach valuable lessons that cannot be learned in training, or during "war gaming". When the enemy possess weapons or tactics that you have not seen used, or demonstrated they cannot be integrated into a war game. Look at the upgraded armor, drone usage, IED detection/suppression, sniper detection developed for and used in the middle east. This barely existed (maybe in concept) before the conflicts of the 00's. Similar lessons are being learned in the Ukraine right now (counter drone operations, active tank armor, electronic warfare/signal jamming etc.)