So, what? You just stop once you eliminate the known possibilities?
That last possibility REQUIRES experiment, investigation and thought to verify. If you discover a new possibility then you apply the process again.
The approach is not a one-shot deal, you MUST keep applying it. The current laws of physics are models that we use to explain what we observe and (if the model is good) predict what we might observe.
This by no means implies that that the models describe what's really going on. It is possible to have a model that describes a system that works but is not complete. The deeper we dig, the more we learn.
The fictional quote was meant to describe a deductive approach to investigation, not a rigid method. How often did Holmes dig up new facts and change his mind after eliminating possibilities?
It still involves a rigorous logical reasoning, not accepting something because you're running out of ideas.
This is still based on falsifying the hypothesis; prediction is one of the useful tools by which a hypothesis can be experimentally tested. If a prediction ends up being incorrect, you're left with the null-hypothesis. It's entirely possible that the null-hypothesis may not be particularly useful, but it - as Holms said - "must be the truth".
At it's core, the scientific method is simply proposing ideas, and testing them. As zombie-Feynman said. "everything else is bookkeeping"[1].