The runner doesn’t watch the ball, the coach does and tells the runner whether to hold or continue. The exaggerated windmill is so there is no mistaking the signal.
I understand the third base coach signaling to run home when the runner is running, but I could never understand the third base coach flapping his arms and and grabbing his hat scratching his butt during pitches.
I played on one bar team, and there was one team that took things way too seriously. I remember the third base coach doing all kinds of weird stuff while our guy was pitching the ball and I remember thinking what the heck is he doing.