No, it doesn’t. Cheating is still incredibly common on games that install malware

I never claimed it's flawless or that it works in all cases. Think of it like antivirus software. Does it catch every and any malware that has and will ever exist? No. Does it still work to minimize all kinds of "bad shit" for normal end users? Yes.

If people care enough to cheat, they will cheat whether you have kernel access or not.

Lets rephrase that: If people care enough to commit crimes, they will commit crimes whether you have cops in your city or not - Your statements logical conclusion would be to get rid of police and crime investigators. Does that sound reasonable? It shouldn't, and it doesn't make sense against anti-cheat software for the exact same reason.

They use it for the exact same reason they use DRM. Because they can.

They use it because it solves a real-world problem that's unsolvable by other means. There's no real alternative because you have to trust the end-user, who, although may not be very likely to cheat, makes it extremely easy for a bad person to spoil the fun for everyone else.

I would love to live in a fantasy world where we don't need cops, a government, rules, regulations, and anti-cheat software, but there are bad apples that will spoil the fun for everyone.

It also can’t possibly theoretically “reduce harm” when every single installation on every individual computer is many orders of magnitude more harm than all cheating in every game ever made.

I mean "reduce harm" in the strict sense of spoiling the fun in gaming. vulnerabilities happen with all software, this isn't unique to anti-cheat.