For one, no one is seriously contemplating a LIDAR-only system, the question is between camera+LIDAR or camera-only.
> Lidar just fundamentally can’t read signs, traffic lights or road markings in a reliable way.
Actually, given that basically every meaningful LIDAR on the market gives an "intensity" value for each return, in surprisingly many cases you could get this kind of imaging behavior from LIDAR so long as the point density is sufficient for the features you wish to capture (and point density, particularly in terms of points/sec/$, continues to improve at a pretty good rate). A lot of the features that go into making road signage visible to drivers (e.g. reflective lettering on signs, cats eye reflectors, etc) also result in good contrast in LIDAR intensity values.
> camera+LIDAR
It's like having 2 pilots instead of 1 pilot. If one pilot is unexpectedly defective (has a heart attack mid-flight), you still have the other pilot. Some errors between the 2 pilots aren't uncorrelated of course, but many of them are. So the chance of an at-fault crash goes from p and approaches p^2 in the best case. That's an unintuitively large improvement. Many laypeople's gut instinct would be more like p -> p/2 improvement from having 2 pilots (or 2 data streams in the case of camera+LIDAR).
In the camera+LIDAR case, you conceptually require AND(x.ok for all x) before you accelerate. If only one of those systems says there's a white truck in front of you, then you hit the brakes, instead of requiring both of them to flag it. False negatives are what you're trying to avoid because the confusion matrix shouldn't be equally weighted given the additional downside of a catastrophic crash. That's where two somewhat independent data streams becomes so powerful at reducing crashes, you really benefit from those ~uncorrelated errors.