Or is this just meant as a visualization of latency in these scenarios versus what it would be like with musicians playing x ft apart from each other in a room?
Since I only used acoustic drums until then I never gave much thought to the idea of having your drums sound delayed. It was quite eye opening.
It is relevant, and monitoring via headphones or a floor speaker is a mitigation.
It's also a problem for large orchestras. If everyone else just plays along with what they hear from the people near them, the timing is going to be inconsistent across the orchestra pit even if you have some obvious audible reference like loud percussion. The mitigation is to orient yourself as much as possible around the visual cues from a conductor.