Your initial thought is why most people believed there to be little use in IO other than maybe removing software watermarks and the like. But this idea of a "punctured program" came around in which you can place the key in the program in a very clever way such that you get a security proof about hiding the key in the obfuscated program.

It turns out we can do just about anything in modern crypto using IO - it is an extremely powerful primitive - including symmetric encryption, public-key encryption, etc.