In at least some states this was based on data that showed that for people that had clean records the rate of road test failures was very low, and those were almost always due to test anxiety and the person would pass on a second or third test.
A better lesson than the state approved course was paying for a morning on the skid pad at the local raceway with a real driving instrcutor. Once your young driver understands how to regain control of the car, they are much better prepared for the first emergency maneuver they will need to make while driving solo.
You can definitely push the car to the limit and see what happens when you go over in a _somewhat_ controlled environment (laws of physics still apply at the race track and you can still crash). Or you can teach them that a good driver is not the one who drives fast but the one who arrives alive.
In my state the motorcycle licensing works similarly in that you can skip the state test, however unlike what you described for cars, the course is excellent (standard MSF course). Also, the MSF does administer a (pretty tough) test.
Over the last 15 years Virginia has tried to move as many DMV processes as possible to online and closed many DMV locations to save money. The elimination of the road test for most new drivers was part of this effort.
The "adult" driver's license can be acquired at 18.
My instructor drove me for 3 hours instead of the mandated 6, saved himself some gas.
I subsequently got my license.
When I moved to Oregon years later and re-applied for a license, a driving test was required but the DMV lady waived it. Why? Probably because the DMV was way out in the country and she was literally the only one working the office.
I subsequently got my license.
Freedom(tm) is great.
Never had to do a test when renewing my license even when switching states. (And, yes, I've had a very clean record.)