I do think many on CC overrate the value of ECs, though I wouldn’t say they’re unimportant. IMO they can matter in three ways.
First, they can sometimes signal truly superior achievement, as in winning a national math or science competition, or being an internationally recognized cello player. But the overwhelming majority of applicants won’t be at that level.
Second, they can help the admissions committee round out a class. I believe it was the admissions director at Harvard who was once quoted as saying they don’t want an entire class full of class presidents—not that there’s anything wrong with being class president, it’s a significant (though not world-class) achievement in its own right, but the point is they don’t want an entire class of any one thing, and ECs help them do some sorting and balancing. At this level, ECs aren’t so much an achievement or a qualification, but rather just a marker of interests, skills, and experiences that can be balanced and blended to make an “interesting” and diverse class. (Of course, if they’d like to add some musicians, they’ll probably want some accomplished musicians).
Third, and perhaps most importantly. ECs help tell a story about who the applicant is as a person—what do they choose to do in their free time (away from the classroom and studies), how vigorously do they pursue it, and how does that fit in with the whole person as seen in essays, academic interests, LORs, etc. I agree that the term “passion” is now overused, but let’s not forget it originated with the adcoms. It’s in this third category especially that they’re looking for genuine interest and commitment to pursuit of the EC for its own sake, and not merely “manufacturing” ECs so as to polish an application. The latter tells a very different and generally unflattering story about the person.
Also note that the schools themselves tell us in the Common Data Set how important they think ECs are. Many of the most selective schools say they’re “important”—but not as important as grades, test scores, GPA, class rank, rigor of HS curriculum, essays, LORs, character, and talent/ability, all if which tend to be rated “very important.” But this is by no means uniform. Yale says ECs are “very important.” At the other extreme, Harvard says they’re merely “considered” along with all the other aforementioned criteria except class rank, which Harvard says is “not considered.”