Does no contact really mean that?

Totally depends on the context, but in most contexts I can think of, it means what it says.

If youre referring to a sign in the club/club rules usually its done because of legal reasons. There are usually dancers who will allow touching in private dances

In Massachusetts it's not legal for patrons to touch the dancers on stage or in private dances. Most clubs ignore this rule and let it happen. Especially with the private dances.