Its insight was that an option can be replicated by a continuously adjusted position in the underlying and cash, which means its price is determined by the cost of that replication rather than by anyone's opinion about direction. Expected return does not appear in the formula at all.
Nobody believes the model is true. It survives because it is an invertible dictionary: quote a price and it gives you a volatility, quote a volatility and it gives you a price. The entire volatility-surface exists because traders use one wrong model consistently and adjust its single free input.
Example: XYZ at $50, $50 strike, 45 days, 4% rates, 31% volatility. The model returns about $2.29 for the call. The market trades it at $2.42, so the market's implied volatility is closer to 32.9%. The disagreement is expressed entirely in that one number.
Related: black-scholes-assumptions, implied-volatility, binomial-model, theoretical-value