For any concept, you can find a sufficiently rich context that makes the concept inadequate. The concept would be useful in simpler situations, but breaks down in more sophisticated ones. It's still recognized in them, by the same procedure that allows to recognize the concept where it is useful.
A concept is only genuinely useless if there hardly are any contexts where it's useful, not if there are situations where it isn't. You are too eager to explain useful tools away by presenting them with existence proofs of insurmountable challenges and the older cousins that should get deployed in them.
When you are worried about the fallacy of compression, that too many things interfere with each other when put in the same simplistic concept, remember that it's a tradeoff: you necessarily place some not-identical things together, and necessarily become less accurate at tracking each of them than if you paid a little more attention just in this particular case. But on the overall scale, you can't keep track of everything all the time, so whenever it's feasible, any simplification should be welcome.
See also: least convenient possible world, fallacy of compression, scales of justice fallacy.
It's getting more and more obvious that my neurology is a significant factor, here. I deal poorly with situations with some kinds of limited context; I seem to have never developed the heuristics that most people use to make sense of them, which is a fairly common issue for autistics. I don't make the tradeoff you suggest as often as most people do, and I do tend to juggle more bits of information at any given time, because it's the only way I've found that leads me, personally, to reasonably accurate conclusions. Instances where I can meaningfully address...
Tyler Cowen argues in a TED talk (~15 min) that stories pervade our mental lives. He thinks they are a major source of cognitive biases and, on the margin, we should be more suspicious of them - especially simple stories. Here's an interesting quote about the meta-level: