Or indeed, it's possible that neither you nor the virtue signallers understand why they're doing it.

Regardless of whether or not either interlocutor understands the term, using the term virtue signaling itself is self-defeating for both parties for different reasons.

For the one hearing it, it’s a red herring, and for the one saying it, it’s a dog whistle. For the third party person reading the interaction without or with lesser context, it’s a thought-terminating cliche.