Agreed. It has no function currently. Even aside from having no dialogue options once they wake up they will just attack you on sight as if combat never ended.
I knocked out the pair of tieflings harassing Sazza because I didn't want to kill them over it. Felt good about it. Went and did stuff. But when I returned to the grove they attacked me on sight and this time I had to kill them outright.
I think knocking people out should be a viable way to solve encounters. Maybe once the enemy is K.O.ed you can use rope from your inventory to tie them up so they can't turn hostile to you.
We have a cage in our camp. It seems likely to me we'll be able to capture people and send them to camp for interrogation at some point.