The idea was that our training must be at a level above and beyond what is actually needed - increasing your skill level so much, only because when you actually do need your skills, your body only will probably only use 5% of what it knows.
Under stressful conditions, much of everything you learned in class will be tossed out the window due to the adrenaline rush, the stress, the variables of a fight. It's in our nature. Why do you think effective fighters only have 1 or 2 basic moves they always count on?
With this in mind, the training must focus on increasing your threshold of skill...so that the 5% you do is more effective and can encompass more. This means making things 10X more difficult than real life, more stressful, more complicated, more difficult...as to increase your ability to capitalize on that 5% you do know even better.
Alternatively, training can also mean increasing your scope of what you can train your body deal with so that your effective 5% is, say someone else's 10% or 30%, etc.
As you can tell, in the way of king fu - it is a long road before effective fighting can really be achieved.
Until then.