If you dotted the context word with itself the dot product would be large, which I guess is not the desired result. That’s a good point!
Just because one word is the most similar to another word does not mean that we should predict that as the context from the target.
An example I can think of is that different parts of speech of the same root word are not good predictions. If the target word is “strong”, then the context word is probably not “strongly”, which is one of the closest words when it comes to cosine similarity.
We need the theta parameters to account for the extra complexity that is involved with prediction (just similarity does not result in good prediction).
I understand now, thank you so much!