It works fine as it is, *if* your server is setup in such a way that WordPress is able to connect to a mail server. A lot of hosts either don’t have the correct setup to do this, or intentionally block it from happening.
Postie is a good plugin, but it has much of the same limitations as the built in functionality with regards to connecting to mail servers. Postie also generally requires that your PHP installation have the IMAP support installed, which is not on many hosting services.
Basically, it’s not something you can work around. If your webserver cannot connect to your mail server, nothing you do in user-code will fix that. It’s lower level, you have to have your host fix that.