People like to see exams as a test of knowledge / understanding, but the true purpose is to produce a ranking order of candidates from first to last. If that order happens to correlate at least moderately well with knowledge or understanding, that's a bonus.
The mark someone achieves on an exam is an excellent measure of how they performed on that exam... it is not necessarily a good measure of knowledge of a subject, understanding, mathematical insight (in the case of a Maths exam), potential for achievement in a future university course, general intelligence, worth as an individual, future worthy, desirability as a partner, likely life span, nor average length of nostril hairs at age 60.
HSC results and ATAR will have a substantial impact on people's short-term future, but results below what is sought can merely slow progress towards a goal. They become less important as they disappear into the past.
Exam results are for ranking / filtering to fit the systems we have, but remember that they are (at best) an imperfect and incomplete snapshot. Every single person is far more than their ATAR and exam results.