The true answer is very simple: They don't get busted.
And this is mostly because they behave themselves and don't bother or risk others and their property. Also most LEOs are not versed on the minutiae of part 107 of the rules, so don't know lacking an observer is a violation.
The long record of safety now established over a decade of flying FPV quads shows it's an unnecessary rule, if certain conditions are met. The VO requirement is under review (
@Vic Moss?), rumor is it's going to be relaxed under new requirements. What I'm hearing (pure rumor!) is no VO maintaining a low ceiling like 100ft, no people, some other stuff. I.e. out in the woods, fields, etc. where there are no people.
Change is coming. Real world experience doesn't justify the current rules. VLOS changes are on the way too.