It demonstrates assessed knowledge and skills within the vendor’s published exam scope. Microsoft exams can use different question formats; check the current AZ-104 guide and exam experience before preparing. That is a real and useful signal. It is not the same signal as "this person can run a system in production". Those are two different jobs. The cert tests one of them.
Inside ten minutes of a technical interview, the gap shows. The candidate who only has the cert talks in service names. The candidate with foundations talks in behaviours. Hiring managers can tell which is which inside two questions.