Losing weight means that your muscles (and also your bones) need to carry less weight, so while technically you're not getting more fit, the fitness you have be

Losing weight means that your muscles (and also your bones) need to carry less weight, so while technically you're not getting more fit, the fitness you have becomes more effective. So losing excess fat is definitely one of the most important steps towards becoming fit. If anything, I would question how healthy ketosis is, long term... But I'm pretty sure it's way healthier than any processed-food diet typical in the west...