Just to put it out.there, here's my understanding of kata.
Kata have 3 main functions:
1. Technique practice - Kata let's you practice moving, stance and power generation under ideal conditions. A natural extention of this is the exercise and attribute development one gains through repetition.c
2. Technique and Combination libraries - Kata hold the techniques of the system and give sample combinations to explain their use.
3. Strategy and Tactics - the combinations embody the strategic principles as well as tricks and traps the creator found useful.
Strategy is how you fight. How you go from introduction to conflict to victory party.
In early training volume repetition of kata or kata segments is how you build coordination in newbs.
As coordination builds you push beyond the constraints of kata sequences with more difficult combinations, footwork drills, evasion drills, blocking drills, grappling drills and introduce impact through pads, bags, makiwara and Fred the indestructible heavy weight in the corner.
You explore the principles by applying the kata in partner exercises that start dead with template techniques and become more natural with live opposition.
You take these principles and techniques into sparring and hone them along with the attributes you've been developing.
The transition from solo kata to fighting is vital because thats the part where you start applying reality to the ideal form of the kata.
Kata in these later stages functions as technical support and study guide.
Now the above process is just one way. I like the idea of throwing newbs into sparring with big 24 ounce gloves alongside the kata process so the reality is right up front and their technique is refined in response to the weaknesses identified in sparring.
That being said much of the karate world has struggled to get to this model because the applications of their kata were lost. The "karate style " of fighting is an independently evolved system based on the shape of karate movement.
I can't speak for CMA like wing chunky.or Tai chi, but they generally just look like they focus on system specific skills while stuck in self affirming bubbles.
Ultimately adjust the training, adjust the outcome.