Once when I was practicing pushing hand form with a friend, one of my nephews came up to me and asked, "Uncle Paul, but people don't fight like that!" And I laughed, the kid was right, people don't fight like THAT. Kids always tell the truth! I think if this little kid sees some free-style pushing hands (with hands/forearms touching, each side wants to (and does) throw off the other side by first unbalancing his opponent), he will still say the same thing. And not-withstanding the fact that there are some pushing hands tournaments in US where the judge would often deduct marks from the one who throws off his opponent and exclaim: Not tai-chi. And still not-withstanding in China nowadays there are more liberal throwing tai-chi pushing hands tournaments in China just short of grappling one's opponent.
How then does this supposedly combat form fit into the contemporary combat scenario? Well, we have to admit the kid's comment. Still not convinced, watch any MMA games and see how THEY fight.
In contemporary combat-style martial art, the concept of fighting range defines what kind of training one needs (and also defining the rules of different tournaments). There is a kicking range where some form of Muay Thai training is needed. There is a punching range where some form of boxing training is needed. There is a grappling range where some form of wrestling training is needed. And when ground fight is permitted, some form of judo ground training is needed (the martial art forms named are just for convenience of exposition). The question is where is the range for pushing hands? Actually there are two other common combative styles that are in similar position: sticky-hands of Wing-chun and combative form of aikido. All these three styles aim at a range that is between the boxing range and the grappling range. Bruce Lee and his students (for example Dan Inosento) called this range "trapping range", and in this range a Wing chun practitioner will trap this opponents his hands and, usually, punch him out. In tai-chi pushing hands and aikido it is different, in this "trapping range" (for convenience, we just use this term for the time being), the practitioner is able to throw a grappler on the ground before a grappler even has the chance to grapple him!
Actually the reasoning is clever. Tai-chi was invented by a famous Taoist, and its practice of throwing people before they can grapple him does seem a right strategy for a Taoist (one who doesn't like fights but sometimes might have the need to push away minor trouble-makers like a drunken guy). It would be rather elegant to do so by staying upright (and without the un-Taoist way of breaking someone's nose) instead of, like a jujitsu practitioner who would meddle around with the drunken guy on the floor - which is never so clean in drinking places!
But in tournament like MMA fights, this "trapping range" is very likely to be closed pretty soon, trying to take an advantage in this range is possible but one is definitely not too wise to bank everything on this range!
In the following (demonstration) video, the aikido master successful throws his opponent off before he can grapple him, and finally submits his opponent to the ground just works within this "trapping range".