Maybe they're so used to people breaking into song as a natural form of conversation that the volume is the least of their concerns.
I tend to find a certain measure of suspension of disbelief to be helpful when it comes to musicals.
That has always been the case with musicals and opera - Not good to ask too many questions as the plot doesn't hold much water. Yesterday I saw a funny youtube video on some of the very convenient happenings in Les Mis. They mostly revolved around the fact that Marius and Cosett/Jean Valjean have hardly even met, let alone spent a day down the pub together and here they all are shouting about their undying love and hopes for each other.
It's like Mimi dying of consumption (a lung disease) in "La Boheme" and then spends a whole Act doing that singing her head off.
Or the fact that the lead role in Madam Butterfly is supposed to be a pretty petite little thing and yet is always played by a big battleaxe of a woman as that is what is needed to sing the demanding part.
All must be taken with a pinch of salt and just enjoyed instead of analysed too much.