Typically yes it's a good indicator but even if in outliers I'm not going to suddenly not care about #1. Djokovic was clearly the #1 in 2012 and 2014 yet only won 1 Slam in each year. OK, they were not dominant years and he is punished for that (in that we'd speak more glowingly about him if they were multi-slam years) but it takes nothing—nothing—away from his being the best of the bunch in both those years. It's a huge two feathers in the cap for Djokovic. I rate 2012 as the strongest year in recent history, and Djokovic won the war in that year. Only looking at big titles is dishonest. Djokovic was rightly rewarded for his more consistent superiority throughout the year. The #1 rank tells us more than just who won the biggest titles and offers the rightful respect to the rest of the tour that exists behind the "Majors".. rather than treating them as invisible and irrelevant. In 2012, Djokovic won a Major AND was the best player in the world.
The #1 ranking tells us by definition who has been most successful over the preceding year, based on points.
I don't think it is perfect, because you can attain a very high ranking without actually winning titles (just being SF or RU all the time).
Nadal's ranking is lousy at the moment for who he is as a player, but look, he (arguably) had a better year last year than Federer because he won a slam.
As a Fed fan, I would have preferred the slam.
So #1 is important, but I don't think we can look at it alone, because even though it hasn't happened much as of yet, #1 and success in winning tournaments don't necessarily go hand in hand.
But it's a very useful way of making non-slam tournaments count more, yes, and for this reason the #1 ranking gives us a different set of information which is highly useful for determining how good a player has been in the year as a whole, in all tournaments.
Basically, it measures consistency in all tournaments.
Also, as for 2012, I think the best player was the All England Single-handed Men's Champion of the World, as I do every year.
Whoever wins that
wins, IMO.
If I could choose between:
A: Wimbledon
B: Any of the other slams + WTF + YE #1
I'd pick A every time, I think it means that much, I really do.