how can carbon dating even work? Its at atomic level!
You are correct in the fact carbon-14 does not care whether or not a life form is alive; however, this is irrelevant in the case of carbon dating. You may be familiar with the carbon cycle, which is, in a nutshell, the recycling of carbon through carbon dioxide. Plants are, of course, constantly using carbon dioxide from the atmosphere to generate large bio molecules that we can eat. We are also constantly recycling the carbon, ingesting it in the form of food, and exhaling it in the form of carbon dioxide, so it is clear that living organisms are constantly replacing their "old" carbon from carbon from atmospheric carbon dioxide. The key factor to carbon dating is that atmospheric carbon dioxide has a higher percentage of Carbon-14. This is caused by high energy cosmic rays which convert nitrogen-14 (the most abundant isotope of nitrogen) into carbon-14 nuclei, which in turn result in a greater percentage of our carbon content being carbon-14. When we die, we are no longer replenishing our carbon from the atmosphere (higher carbon-14 content due to cosmic rays), so the carbon-14 will gradually decay into more stable nuclei, leaving a lower percentage of carbon-14 in our remains. By using the half-life of carbon-14 nuclei, we are able to calculate the time when a certain living organism was no longer exposed to our atmosphere's high concentration of carbon-14. As a side note, carbon-14 dating is fairly accurate because the relative concentration of carbon-14 has remained constant in our atmosphere.