Bitcoin is not "truly anonymous" by default. All transactions are public and can be traced back to you, unless you use non-logging bitcoin mixers for every single transaction.
No, you just mix a bunch, and then use them. But you must use VPNs and/or Tor, to avoid linkage by IP address. If you want compartmentalization, just mix into separate wallets. And if you want strong compartmentalization, do everything via Tor, and put those wallets in separate VMs (such as Whonix).
Indeed, Bitcoin can be anonymous if there is enough critical mass. But that requires far more involment than the average person is willing to do. Cash is easy and simple.
