Unlimited Vacation is great if there is a base guarantee of vacation given to the employees. That is, give them their usual 2 weeks (or more) of PTO in their contract. Then anything on top of that is unlimited.

But companies know full well what they're doing. They know that if they replace guaranteed PTO with unlimited, not only does the employee take less vacation (more bang for the company's buck), but they also get to skirt around state laws on paying for unused PTO when the employee quits.

Plus, without any guaranteed PTO, companies can just decline your request for vacation any time. They can say they're in busy season, or they need office coverage, whatever. Whereas with guaranteed vacation, the manager would have a harder time declining those hours you earned due to bad optics.

Unlimited vacation without a guaranteed PTO base is a scam.

Unlimited vacation is, like you said, dependent on social cues.

Plenty of places with unlimited vacation cue or even pressure employees to take a minimum amount of vacation.

How much vacation you have is how much the company is required to pay out as earned income when you separate from the org. Anything else is generosity that can be rescinded without notice or recourse.

Edit: u/babycake's comment says it better: https://news.ycombinator.com/item?id=29879742

Yes, this is extremely easily solved. We have unlimited holiday, but you must take off at least 28 days (the statutory minimum in the UK).