How do you know it's not working?

Try this: a) start INSERT mode, b) type "abcdefghijkl", c) hit backspace 3x, d) hit ESCAPE to leave INSERT mode. You should see the last three characters disappear.

Backspace on most UNIX vi editors that I work on is not visibly destructive but when you hit ESCAPE, the backspace delete becomes evident. I haven't used VIM for a few months now and I can't recall whether it behaves the same or not.

There is a reason why most seasoned vi users (at least from my point of view), who have learned how to utilize its considerable functionality, chose vi over other editors. It's not because they don't like other editors per se but, rather, it's more attributed to vi's utility and availabilty.