Carfax only reports what is reported to them. They are just another tool when car shopping. I will look at them and generally steer clear of any that indicate a crash for the very reasons noted above. In my mind, there is no substitute for having a qualified mechanic you trust look over the car before purchase. I've walked away from deals where the owner didn't want the car looked at by my mechanic.
One of the last cars I bought, had virtually nothing on the Carfax about maintenance, but the owner had very extensive records. My mechanic confirmed it was very well cared for and had no evidence of crash damage/repair.