How is this different from more practical self defense? In the 21st century, alot has changed since the time of its creation. Alot of things that worked back then are now obsolete in the modern world. If you tried to use a katana on an unarmed attacker now, you will run into alot of problems with the law. Modern self defense addresses modern problems. No one will attack you with bo staffs, butterfly knives, katanas, and other ancient weapons that traditional martial arts train you in. No one is going to realistically throw everything in one punch as seen in martial arts demonstrations. Your not going to be able to magically know when you will be attacked. Your attackers will use modern weapons with modern day approaches. Much of the combat shown in traditional martial arts are done for the sake of the art or it's original purpose, not to defend yourself in the modern world.
The problem? The sports mindset is different from the world of self defense. In the real world, you risk breaking your fists in a street fight if you punch incorrectly or solid bone thus reducing your chances of effectively dealing with the next threat. That's why you see MMA fighters and sport based martial artists spar with gloves. The other issue is that you are training to fight someone on a similar skill level when it comes to sport. There's no weapons, no multiple attackers, no dirty fighting, no disadvantages in size, and no one trying to kill you in the ring. On the streets, there are no rules. Effective self defense should prepare you to respond to any situation. There's no "fighting fair" when your defending yourself. In fact, there shouldn't be any fighting at all. Your not going to survive every situation if you treat each one as a fist fight.Your goal should be to end the threat as quickly as possible by putting your attacker at a disadvantage usually through two ways 1) Incapacitation 2) Taking away mobility with or without the use of weapons. For example, if i'm faced with an attacker throwing punches and i have a sweater in one hand then i'm going to throw it in his face. This will provide a distraction for me to land a kick to the groin and another kick to knock him or off balance then run away. If i don't fight dirty then it's skill against skill and if my attacker is more skilled than me, i'm probably going to get hurt or killed. Even if schools in combat sports claim to teach self defense, they most likely won't teach you how to fight dirty or how to use weapons to end the threat quickly.
How is this different from self defense? You don't have the same advantages and authority as law enforcement does in self defense. Furthermore, your aim isn't to kill unless there is no other way to stop an attacker intending on killing you and you can justify it in court.
In conclusion, you have to know what your purpose is in self defense and abide by a process. You have to know how to make combat systems effective for you in self defense. I'm not confident that many people learning self defense understand the dynamics of real world violence because they are confused. The best thing you can do is understand the different types of combat to avoid confusion and learn how to defend yourself better.