What an insainly missused word. It should be called something else if the target is ACTUALLY blinded. Poor choice of words Larian.
It's not Larian's choice of words.
The game is based on Dungeons and Dragons. They use the Blindness condition (It also works differently there, it causes you to auto-fail any sight based checks. I.e. You're actually blind). Larian merely reworked it to make it functional for the game and its systems.
The thing that is not mentioned is the touch range. Where even if you're blind, you can stick your arm out and feel for a target and simply shoot a ranged weapon or sling a ranged spell at the thing you literally can just feel by holding your arm out even if you cannot see. That's what's being recreated with the limited range from BG3's Blindness effect (Extended somewhat to account for weapons with extra reach)