I'm unsure as to why black usually does go c6 and thus creates this target on d6.
The key point is this: it's not a weak point unless it can be attacked, and white can currently only attack it with one bishop, which is easily defended against. If white tries to attack it further, they can only do so by opening the d-file, which ends up removing the weakness (9. dxe5 dxe5, for example) and also demonstrates the usefulness of 8...c6 (it is covering d5).
As for why black is playing c6 over other options: the position in the centre is in considerable flux, and black doesn't know where they want the rest of their pieces until the centre settles (e.g. if white closes with 9.d5, the rook doesn't want to be on e8 and instead was perfectly fine on f8). 8...c6 is a move that retains black's flexibility and gives white another chance to act decisively.
As previously mentioned, it is very useful if the centre opens with 9.dxe5, but it is also useful if white advances 9.d5, because after 9...c5 white can't take en passant and black gets a structure similar to the Czech-Benoni but with more comfortable development.
Of course, white is free to maintain the tension, continuing the theme of the fianchetto response to the KID.
Edit: in the exd5 exd5 lines, you are possibly wondering about the vulnerablity of d6, with the pawn defending it having advanced to c6. This is an important thing to think about, and I can't answer it from my own experience, but in practice the g7 bishop retreating to f8 is enough to cover it (swapping off the the bad bishop in the process :-) )