It only works when the people who run two bands can pull the others in when required and those other people are doing nothing else.
As a person who prefers to have one band and nothing else, I have always found that if someone is in two bands, their availability is compromised and so is their attention span and ability to absorb and devote time to learning new material. It very rarely works and there is always going to be conflicts over which band gets first dibs on dates. It's just a nightmare.
The people who elect to be in two bands (but don't run diaries) always think they can make it work. They of course, are not the ones tearing their hair out over broken gig schedules and aren't the ones going back to venues saying 'oh I'm sorry, x is suddenly not available'.