The .223 cartridge is identical within several thousandths of an inch to the military 5.56mm NATO cartridge which has been the standard military service round since Vietnam. The cartridge may carry a higher powder load, giving the round a muzzle velocity in excess of the military round.
I can assure you from personal observation that this round produces lethal wounds on many parts of the human body, especially at close range and especially with multiple hits.
You are correct that it is not considered legal ammunition for deer and other large game in some states. Other states do permit it. If your point is that this round should be considered in a class with .22 LR, pellets, etc., then you could not be more wrong.
.223 is not legal for deer in some states because it can mortally wound without a quick kill. Which is inhumane. And ruins the meat.
However, in war that can be considered the goal. A single mortal wound can tie up multiple support personnel, which is better from a strategic standpoint.
Also, most of the .223 rounds available to civilians are FMJ which don’t do the desired amount of damage because of over penetration. That said, I sure don’t want to get shot with it. Even with cheap target ammo, a good marksman can pump multiple rounds into a single target very quickly, increasing the odds of hitting vital organs.
IMO a lot of discussion about caliber are academic outside of the battlefield. Guns and bullets are nasty stuff, which is why we need to carry them to use on the bad guys. There are more of us than them, so if we are armed they will be the losers.