I think the reality is that researchers justify themselves to grant writing organizations in whatever way they can but are often just doing science for it's own sake.
Anecdotally, I watched a talk about how the structure of the ribosome was solved, and the researcher mentioned that they justified themselves to grant writing organizations by saying it would help develop antibiotics - which did turn out to be the case, but they described themselves as feeling amused rather than vindicated.
Bingo. While understandable, I fear the need to justify nearly all research by potential foreseeable gain limits our ability to invest in truly fundamental science.
Yes, grant-style funding is really bad for basic research. For where larger institutes have the advantage: a few prestigious findings can bring the funding to do a lot of less glamorous stuff on the side.
Or trying to advance their careers, which isn't the same thing, as it's self-interest without regard for whether science is being meaningfully advanced.
Anecdotally, I watched a talk about how the structure of the ribosome was solved, and the researcher mentioned that they justified themselves to grant writing organizations by saying it would help develop antibiotics - which did turn out to be the case, but they described themselves as feeling amused rather than vindicated.
I believe it was this talk.
https://www.youtube.com/watch?v=TRIDCQM3d7I