Dog shows generally say “In assessing dogs, judges must penalise any features or exaggerations which they consider would be detrimental to the soundness, health and well being of the dog.” But do they?
In short, no they don't. You've only got to look at many of the BoB winners from last year to see that the judges aren't penalising physical features which they should be. There were BoB winners with excessive wrinkling, severe ectropion, heavy nose rolls, bulging eyes, stenotic nostrils, obvious signs of respiratory distress, etc., etc..
The very obvious physical deformities present in some breeds are also only the tip of the iceberg, there are more and more heritable health issues surfacing all the time as a direct result of the ever decreasing lack of genetic diversity in pedigree dogs. The current model of pedigree dog breeding in the UK (distinct breeds with completely separate stud books) inevitably results in ever decreasing levels of genetic diversity and the culture of "breeding only from the best" which is still pervasive in the showing community only hastens that loss.
Unfortunately there's still a great deal of resistance against both reducing exaggeration in those breeds that need it or taking steps to improve (or at the very, very least slow the loss of) genetic diversity within all breeds.