I think you may be misunderstanding what is meant by 1/2 MOA. The phrase means 1/2 minute of angle. It does not mean 1/2 inch.
What the heck is minute of angle? well, a minute of angle is a measure of angle, just like degrees... 10 degree angle, 5 degree angle, 1 degree angle... 1 degree is getting pretty small. But the really really small angles are measured not in degrees, but in minutes of angle.
A minute of angle is 1/60th of a degree. Imagine a right triangle where the base of the triangle is 3600 inches (100 yards), the height is 1 inch, and the hypotenuse is 3600 inches. That very tiny angle is 1 minute of angle.
So it works out that at 100 yards, 1 MOA is pretty much 1 inch. But at 300 yards, 1 MOA is about 3.14 inch. At 1000 yards, 1 MOA is about 10.5 inch.
So when people talk about 1/2 MOA at 1000 yards, they are talking about shooting a group of about 5 inches. And this level of shooting does happen at major competitions. It is not a fantasy.