If we're talking about effort, timelines, etc, then it does work. You are right that it generally doesn't work on the surface. However, even if the estimates are wrong, the benefit is that the artificial dates and such provide a mental push. In some cases dates are important, to meet a business deadline, beat a competitor, etc. Breaking that up and pushing it down to smaller stories means more feedback which provides more of that 11th hour push more often.

And then of course things like costs and staffing are crucial to any business.