Which, of course, does not help things like polish polish (made in Warsaw) and to produce produce (pull apples out of a bag). However you look at it, when they set up English words and spelling there was large quantities of alcohol involved.
If you look up these words in the dictionary, the same word with the same spelling very often has several different definitions that are often unrelated because homographs (same spelling, but different meaning) are super-common in English. Dictionaries don't account for newer or more niche meanings of words either.
How is it that you can say these words without confusion?
Language is context sensitive and you understand the word based on the context around it. Likewise, you understand homographs based on the context. Because of this, spelling isn't as important as it might appear.
On paper, yes. But not when someone speaks. If you used a homophone while speaking, the listener would be able to distinguish which variant the talker intended based on context. I would argue this is enough of a reason for written text as well.