The point of a digital signature is to announce that you made this document, as it exists at the time of writing. Once a change is made it should no longer identify as signed.

Most institutions don't use this functionality, despite the usefulness of it. At present, I'd recommend using it for publicly distributed files to protect against bad actors publishing a document that pretends to be yours.

As for legally binding, ask a lawyer. Generally, things are legally binding if they're signed by all parties. The specifics get funky, but a digital signature is a solid step for announcing that you did this thing at this datetime and a judge should recognize that if it comes down to it. Bonus points if all parties attach their digital signatures.

I'd say the purpose of the feature is to do as intended, ensure the documents authenticity and integrity. The mechanism still requires people trust your signature (public key), so you need another strategy to establish that trust. If you wanted to share a confidential document to a person you know on discord, and they already trust your discord profile, you would need to use said profile to get people to trust the key you're going to use, belongs to and identifies you. This really isn't different from third party Cas, just a lot of certificates from them are already trusted by default and part of the internet wide key infrastructure.

I’m not sure if this is legally binding, but it’s a way to prove that someone said “I signed this document and it has not been modified.” While S/MIME certificates are most commonly used for this purpose, getting one (especially for free) is nearly impossible. Signing with a GPG key is just using another tool, one whose ecosystem doesn’t require CA-sanctioned trust; the reader decides which keys are trusted and verified.