tiggy you have put it superbly.
My own DS is still in nursery, but I have one of those jobs when you are limited as to when you can take holiday - fortunately I can always take holiday at Christmas - in fact I am forced to do so - and although my own break at Easter can be just 3 days and sometimes does not overlap with the school holidays, I can also always take holiday at some point during the school summer holidays, and DH usually can, and it won't kill us if one year we just have a staycation in the summer.
I know about some of the families that take foreign holidays in term time or have a lot of absences from both my volunteering as a Brownie leader (not that it affects us, but families tell us where they are going, why, and when) and from a very good friend who's a teacher in an Inner London school with a lot of social problems and a lot of newly-arrived families (think 7 year olds who've come from Eastern Europe with no English who've never been to school before).
In our more middle class area, there are families visiting their relatives overseas at more convenient times/for longer. And some of those take a month off, because India/Australia is just too far. Those include children that I know are very bright who probably won't suffer, but when the overseas relatives say "but that's when the wedding IS" or "but it's just so hot in August, Granny won't want to see them then" it's hard to say no to the relatives.
I have heard from teachers that the old system did not work well. In my friend's area, there are both the long-term truants/poor attenders (and a lot IS being done to help them, including those whose families can't work out how to get up and get everyone ready for school), and those who randomly move between countries, seemingly as the whim takes them, and who are not actually that bothered by threats of losing a place at school. My friend's job includes a lot of trying to engage those sorts of families - she has had a good deal of success - it is very uphill work. But there are so many families coming and going at odd times of year anyway, that weeks of time off in term time is incredibly disruptive; it's hard enough for the teachers at her school to manage new arrivals without children re-entering after a month off.