It works inasmuch as dwarves actually do the things they intend to do, as opposed to being locked eternally in "waiting for X" loops (though I'm pretty sure that was already true as of 31.19 and had been for a while). But the rate at which brand-new recruits gain skills from scratch through demonstrations alone is abysmally poor in my experience, and sparring barely happens at all until they're already fairly competent (and even then not terribly often, as far as I can tell). I'm not sure if I've ever seen one rise above novice anything from dabbling through passive training alone. I find that it's much better to hunt wildlife or cavern monsters for gaining experience to start with; it's pretty safe even for totally unskilled dwarves if they're fully armored and it really kickstarts your training a lot. You'll have enough at competent or better to stave off your first goblin ambush, and although you might lose a couple of unlucky soldiers the survivors will have learned so much more from the fighting that they'll be in even better shape from then on out.
Also, healthcare actually functions smoothly now, so soldiers who are wounded but don't take damage to the central nervous system will make full or near-full recoveries, which is arguably a bigger boon for military functionality than increased training anyway.
You can also do the "danger room" thing where you station your armored recruits over repeating upright wooden spike traps for fast experience, but I've never been particularly fond of that method.