> Why are people (students, faculty) playing along with that?

From the faculty perspective: lack of time to do anything else. Writing good test questions (questions that require synthesis of multiple topics and not just regurgitation) is hard, takes a lot of time, and may not even be possible in some introductory classes. Looking for cheaters after the fact is time consuming, too. I have to pay for a Chegg account out of my own pocket, and then keep it open whenever I do my grading, to look for solutions to my own questions.

That said, I steadfastly refuse to use Lockdown or Protorio or any of the other "solutions" my school offers; the downsides are simply too great. If I end up passing a few people who cheated their way to an A, that's a price I'm willing to pay.