Recently I answered a thread with this as a subject but I feel it is strong enough a point to create a new thread.
MMA is martial arts. There is no different between MMA and martial arts. MMA describes a skillset and nothing more. What you are meaning to say is informal vs. formal combat. Televised, Sport MMA is informal (no uniform is enforced, quick touch of gloves, and etc.). A tournament (typical) is formal-- you wear your discipline or school's uniform and render courtesy. Sport MMA is televised and must follow certain rules. The techniques are revised for 1 vs. 1 combat and non-lethal applications. A mixed martial artist not participating in sport fighting is not going to limit his or herself in the street and/or against multiple enemies. Grappling is effective against multiple enemies but only if techniques are exectuted quickly or used to cause an incapacitated enemy to be some sort of defense.
Every martial art can potentially 'work' in Sport MMA unless it relies exclusively on illegal techniques. No established martial system can be called broken solely because a fighter is not a champion. The fighter is simply unable to apply the correct technique.
I'm not sure I really get the point of this thread. But in any case, your assertions are not very logical.
I would actually say that MMA is "formal" and traditional martial arts are "informal." Now, I'm not really referring to modern sportive arts such as Karate, Judo, and BJJ, as those do tend to be more similar to MMA in training and purpose when you throw in sport and competition. I am referring more to traditional martial arts, or modern arts practiced in a traditional way.
MMA is a profession. As with any sport, MMA practitioners are professional athletes training for the single purpose of winning matches. They train specifically, and only for the circumstances and rule sets they will encounter in the ring.
Traditional Martial Arts are not a profession. Practitioners are not professional athletes, and they do not train for sport and competition. They are amateur martial artists with more interest in understanding the art itself than in winning competitions.
These different approaches create stark differences in what you get out of your training, and how you approach it. The goal of a MMA practitioner is simply to win competitions by the simplest and most effective means possible, and he will use any art to do so. Traditional martial artists are usually more interested in trying to understand their art above all else. Now, there is a lot of overlap these days with many people in traditional martial arts taking a lot of liberty in "making the art suite them" (or suite what they want it to be), and mixing different arts. But for the most part, the goal of a traditional martial artist, at least in terms of
learning, should be to understand and internalize the mechanics and principles of his art.
Each are training for different goals, and different purposes, and adopt the best methods for those goals. An MMA athlete is not usually going to put in years and years of time studying and trying to understand in completion an entire traditional system, nor is he going to put much value on applying the principles and structure of that art against others. It's a more efficient use of his time to learn a variety of simple and effective arts, and use each one when it's needed, than it is to try to adopt a broader, overall approach to combat. It's not, of course, that such an approach isn't effective; but in a professional sportive setting against professional, very well rounded athletes, with rules and safety equipment, it's very difficult and not an effective strategy if your goal is to compete in such competitions on a regular basis.
On the other hand, sportive competitions, even in MMA, train for a very specific set of circumstances that are not present in real combat. A lot more things are taken for granted than you might think in competition -- even in MMA;
There will be only one opponent. He will be a professional athlete. The combat will be by mutual agreement. There will be a variety of rules which not only disallow certain techniques (attacks to the neck, groin, back of the head, kicks to downed opponents, etc.), but also discourage generally "unsafe techniques" -- for example, even open hand strikes are generally discouraged due to the chances of eye gouging. There will be plenty of safety equipment that change the dynamics of the fight as well; strikers will be wearing gloves. Contestants won't be wearing shoes or clothing. They will be fighting on a safe surface; there will be no concrete, pavement, walls, garbage, items, rocks, stumps, roots, trees, other persons, or makeshift weapons lying around. There will be no chance of an opponent pulling out a weapon. There will be a time limit. There will be a referee. You won't be fighting for your life. You won't be seriously trying to injure your opponent, or him you. You will know your opponent before the fight, and after the fight. You are practicing for a very controlled environment, against very a very specific kind of opponent, and you must train in a very specific manner in order to have a high chance of success.
Most of these things are not true for circumstances in which other martial arts were designed for, whether those designs be military training, general methods or approaches to combat, self-defense, or cultivating a specific skill or skill set. And there is specialization within the arts as well; not every art is designed for every situation. Consider, for example, historic Japanese sword arts. You have those arts which were designed for the battlefield, and armored practitioners, and those which are designed for unarmored combat. You also have arts that train specific skills, such as battou/iai jutsu. You have these same considerations also in many forms of jujutsu; some are designed to operate on the battlefield, against armed and armored opponents. Other styles are more recent, include striking, and are designed for unarmored, and often unarmed opponents. All are designed for opponents who are actually wearing clothes. There is a whole variety of circumstances and specific training behind every art. So, the key, as far as I'm concerned, is understanding your art.
I meant bowing, and stuff. 
