They eat less dairy, but hardly none. I have heard people say that a scoop of ice cream or a glass of milk each day is not a problem, but more can be. Intolerance also seems to increase with age, so younger people can consume more dairy.
A 1975 study in Japan puts intolerance (unable to drink 200ml of milk comfortably) at 19% of the population. I would suspect that massive exposure over the past 50 years has lowered that percentage significantly.
Case in video: Chinese and milk tea
Most yogurt cultures reduces lactose content of the milk base during fermentation. Some cultures like the one Yakult uses supports increased lactose digestion in humans. At the same time lactose intolerance is not binary but a spectrum.
Lactose intolerance is not absolute.