Indeed, all it does is break up the rocket. Depending on when it happens during the launch we might still end up with a fireball near the ground (unlikely to be near anything inhabited, though, as there's a lot of free space around launch sites) or with a quickly disintegrating rocket because it's already at high speeds.
There will still be debris, of course, but I guess the reasoning is that it's preferable to have relatively small debris, than one large piece of exploding debris.
