To some, 'passing the torch' only means losing the World Title and setting someone else up as the top guy from that point on. Often it does, but there's another, looser meaning of the term. When the title isn't involved, it can refer to that cool moment when one wrestler puts another over so strongly they almost give them their life force; their own personal stamp of approval.
It's a way of saying to fans that the winner is who they should focus on now. They're the benchmark, not the loser, and they've conquered their wrestling equivalent of a video game's final boss. Yep, 'passing the torch' is a sweet way of transferring fan attention from one star to another.
Does it always work long term? Hell no.
That'll never stop WWE trying, just as it didn't stop those in charge of the NWA/WCW in prior generations. If done right (at the correct time with the correct wrestlers), it can be a symbolic changing of the guard. If handled poorly, it usually results in a hasty reset over the next few months or years...