TT = Learning the fastest way/best lines around the track, which is mandatory in a real race if you want to have any real chance of winning. In TT hoewever you can have a magic lap where everything goes right and you post a great time when in reality your actual pace is way off. The way this applies to racing is that if you cant match your TT pace or if your actual TT pace is way off from your best time pace, in a race where there are many more factors other than yourself and the clock, for most drivers it becomes much harder to maintain that pace. Also, even if you're consistent in TT it does not mean you'll be consistent in a real race. The downside to TT is that no matter haw many times you go around a track it will not improve your racecraft.
Racing = Great judgment, patience, great reaction times, running alternate routes/lines to get around your opponent/traffic, consistency, and courtesy. Yet you can have all these things and still be way off pace because you dont know the quickest lines around the track, thats where TT comes in, to be fast at a track you MUST learn it and the best way to do so is Time Trial.
That being said, a great TT'er will never become a great racer if he sticks to TT alone, where as a great racer can achieve great pace and learn great lines through racing but the process will take much longer than if said driver had practiced using TT.
A good driver has a mixture of both, being a good racer and a good timetrialist. A great driver has the perfect balance of both.