Perhaps this explanation will help you to understand why.
An OCPD has two purposes: (1) To protect against a short to ground, and (2) To protect against excess current overheating the wire.
With respect to the first condition, even a 24ga bell wire creating a dead short will conduct enough instantaneous current to trip a 20A breaker. So the 16ga flexible cord poses no risk in that regard: if there's a short, the 16ga cord will easily conduct enough current to quickly trip the breaker without the cord bursting into flames.
With respect to the second condition, the conductors in the building must be rated no less than the OCPD because who knows what will be plugged into the outlet. If someone were to overload the branch, you don't want the wires to melt before the breaker trips. So for a 20A OCPD, you must install 12ga or larger wire. But the lamp or appliance has been designed to only draw a limited amount of current. The engineers base the size of each wire in the lamp/appliance -- including the flexible cord supplying the lamp/appliance -- on the amount of current the lamp/appliance will draw (plus some safety factor, and limited to be no less than a minimum size). They know that, under normal circumstances, the lamp/appliance will never draw enough current to melt that 16ga cord. That's why it's able to get listed, even though it may be plugged into an outlet with a 20A OCPD.
