Eh, kinda. It technically preserves content, but it has almost zero discoverability. The site disappears from Google & co, so unless you come across a dead link in some old HN or Reddit thread, you won't even know it's there.
One thing they've added to their extension lately is a count of how many times a page/site has been saved. If one finds a great resource with a no- or low-count, it can be added at your request; sometimes it will ask if you want to save the page.
I have come across some wealth of deeply technical information by entering dead links on still live pages in the wayback machine, and then following crosslinks from there to further old sites. I shudder to think what would have been if I hadn't found the dead links in those cases, and I'm sure I still missed a lot because I didn't know it was there. So yes, this is a very real problem.