Brand new aircraft still include fixtures to stub out cigarettes in the bathrooms, because it doesn't matter if you declare that something's forbidden, people will do it anyway and you need to do what you can to minimise harm.

The ashtray is required equipment, and you can't legally dispatch the airplane if it is inoperative, unless you disable that lavatory. Truth! 14 CFR 25.853 (g)

https://www.ecfr.gov/current/title-14/chapter-I/subchapter-C...

Won’t smoking in an airplane bathroom set off an alarm?

Yes. The person triggering the alarm will still likely look for a place to extinguish the cigarette, and pretend they've done nothing wrong. The ashtray thing is there because otherwise those idiots will put the burning cigarette in the trash or in the tank with chemicals in which it might just cause a pile-up of debris and clogs.

I'd put this a bit differently, though with the same general idea:

- The alarm will alert flight attendants to the situation, allow them to identify the violator of the non-smoking regulation, of the potentially hazardous situation (open flame in an aircraft), and if necessary bar the person from future flights.

- The ashtray will likely prevent a lit cigarette from burning down the aircraft in flight if improperly disposed of with, say, dry paper trash.

A smouldering cigarette in a rubbish bin could imperil the entire flight, passenger manifest, and crew.

I think you misremember. The cause of the fire on Air Canada flight 797 was never conclusively determined; a cigarette could not be completely ruled out, but was deemed very unlikely.

Smoking culture was a contributing cause since it made fires in trash bins so common that the pilots didn't react with urgency to a fire that looked like that (but in that case was definitely not).

Having smoke alarms was absolutely the correct response, because smoking is by no means the only cause of fires on airplanes. In fact, I'm not even sure there has been a single fatal crash involving fire that has been definitely caused by smoking, but there are many that are known to have been caused by other things, such as Nigeria Airways Flight 2120, Swissair flight 111, ValuJet flight 592 and China Airlines Flight 120.