I think the assumption is that the cars won't literally circle the streets forever and that some parking will remain, just that it can be more efficiently allocated when the proximity from parking-space to destination isn't as-critical. [1]

Though, like you, I am highly skeptical about the curb-side-pickup fairy tale, due exactly the same sorts of situations you describe: concerts, theaters, last call -- even something as routine as picking the kiddies up from school.

People don't seem to realize that if automated cars delivered themselves to the curb at the end of a concert, a 200 space lot would more than wrap an entire city block. [2]

[1] Some breathless fantasists seem to think automated parking will somehow result in more-cars-per-structure, simply assuming valet stands translate into efficiency -- though almost certainly never having been a car porter or valet and knowing it's primarily just a convenience. You're just not going to see the 50-100% space-efficiency gains they seem to imagine.

[2] Assuming a city block of 1/8 of a mile and 20' per parallel space. That's 33ish spots per side of the block, not counting curb-cuts, hydrants, padding for intersections, etc. In reality, a 200 space lot would probably wrap a block twice or more.