In an impact, yes the near fetal postion greatly reduces the stress on the body since there are no shoulder harnesses in the pax seats to help decelerate the upper torso. In terms of vertical deceleration this reduces the chances of spinal injury via compression.
It's very effective keeping the FA announcing the position to remain in. Once they stop the repetition, people WILL look around either exposing themselves to danger OR the event is over and it's time to get out ASAP.