Re-examinations: how common are they and what are they good for?
Are other countries also doing this?


Yes, sure. In my country, Italy, Bachelor's and Master's exams are usually structured in that way: in theory, you can retake the exam for an unlimited number of times. I had once a student who set a kind of record in this sense, by failing one of my exams 21 times, along 4-5 years. As a student, I failed several exams 2-3 times. In practice, however, there might be other time limitations or local policies that can prevent a student to retake an exam an unlimited number of times.


  If I think I am going to do really badly on an exam, I may as well fail it on purpose


For what purpose, exactly? And where's the abuse of the policy? What do you think you're going to achieve by coming unprepared? Do you want to rely on the tunnel effect to pass the exam? It's mostly your time and knowledge that you're going to waste. 


  Or, you can take the exam just to get a taste of how it's going to be like, what kind of questions you are going to be asked,


Maybe in your country is different, but most professors in my country, and I'm among them, distribute to the students all, or most of, the past exam papers: if you want to get the taste of an exam, you can get it already, without the need of going to an actual exam.


  So is it really as 'bad' of a policy as I feel it is


No, it's not. Such a policy, like others (e.g. the level of fees), is usually deeply rooted in the attitude that a country has toward education.