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A dipstick is to ensure that the engine has a proper amount of oil according to the manufacturer's specifications.
It is the simplest way that is also accurate enough for the job.
It has always been correct, but that cannot be relied on have been numerous examples of them malfunctioning, particularly Volvo Penta models that are picky about the oil used. It was connected to the engine through a short pipe, filled to the same level as the engine oil, and displayed the accurate level using actual engine oil. It wasn't apparent while driving, which didn't matter because the oil continued to circulate at the time, and it wasn't quantifiable, but it was plain to see when you first got in the car.
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