The large separation here is just used to demonstrate the principle and make the mathematics easy. In reality the mirrors would absorb some of the light each time they were struck by the pulse and after a time the light pulse would dissipate completely. Also, the fact that we can see the light at all means that at least some of it is being scattered thereby further weakening the pulse. None of this really matters however, because we are dealing with a theoretical proof and not an experimental one. As an aside, there are systems that use the principle of a light clock in order to perform important tasks.
Radar is probably the best known example.
The time taken between the beam being emitted and re-absorbed can be used to calculate the distance of the reflecting object, usually an aircraft. A Moving Light Clock and Pythagoras. There is nothing really that extraordinary about a stationary light clock. In fact there is nothing really that extraordinary about a moving light clock if we are on the same moving platform as it. Imagine being on a rocket moving at half the speed of light and that on this rocket we have a light clock.