It's called security theater because it only gives the illusion of security: there are many examples where people have successfully brought knives, guns, explosives and what have you through these full-body scanners.
Further, it's theatric because the many of the "dangerous" items have no obvious malicious use, and the rules are totally arbitrary. I can't bring knitting gear on an airplane, but my small pocket knife is totally fine (according to official rules, though some airport security agents will disagree).
Finally, any attempt at plane hijacking nowadays will cause passengers to fight for their life to prevent it. Prior to 9/11 people would just sit still and wait to land in Cuba or whatever, but now people associate hijacking with flying into a building and will act thereafter.
It could actually be safer to allow knives and similar "weapons" that can't penetrate the plane body, so people have a chance to defend themselves when some terrorist inevitably smuggles aboard a handgun and starts shooting.