Players who come from the academy are only used by Real Madrid after they loan them to other clubs. It was an opportunity that Real Madrid gave their young players. While at the loan club, Real Madrid will see the player's potential to be included in the main squad after the loan period is over.
The process carried out by Real Madrid is also carried out by many other teams. Maybe Manchester City does too.
I think there are only two teams that use a lot of players from their academy, Ajax Amsterdam and Barcelona.
Barcelona is no longer used to young players, but since Xavi became coach, they have become accustomed to this process again.
That is definitely a good idea, they do try to just use players in small amounts when they are young, and just build up their physical attributes first, it's something that could be arranged easily, you can't make a player be super smart about football, or super talented, there needs to be some parts that comes from within, but you can make them have more muscle and speed, that part is something you can add on later in life.
They try their best until an age, they loan them later, if they show some talent, they bring them back in and start using them in cup games and bench at league games, and then eventually start giving them time in all games as well. That's not really weird and I think that should be considered normal.