All very true. But then you get drama about "what is an asshole". Trust me, it's not just a made up strawman argument. That happens regularly.
Breaking the Code of Conduct isn't a one-and-done thing. You talk to that person, and tell them that what they said was over the line. Be that using a slur, being increasingly insulting to another community member, or something else.
I, as an administrator, basically tell them "not cool". If their reaction is "yeah, alright" then nothing more comes of it. No citations. No three-strike rules. But if someone continually defies our reprimands we have the backing of saying "you've repeatedly been told... " and "this is written in ..." meaning nothing should come as a surprise.
It's also a way for normal users to understand what might be rule-breaking behavior. I can't observe everything happening in a community, as much as I like participating in them. Instead, I have to rely on other non-admin members reporting bad behavior. Making it clear to other users what kind of behavior they can report someone for is also super helpful - and for some people induces trust.