You're right, and this is probably the reason why service X7 is so much of a commercial success (especially when compared to service Arriva's competing X21).The connections from the East Durham services in Peterlee is probably one of the reasons why the X7 is popular and of course there is none on Sundays apart from the 59 which doesn't get close to the X7 route.
Without the local services feeding into the X7 at Peterlee, I fear the only major demand would be between Sunderland and Seaham, and this is already achieved (albeit in a longer period of time) by "Drifter" service 60.
I've used service 21 from Darlington to Peterlee on three or four occasions on Sundays now at different times of the day. I've always been the only passenger to do the full journey, and passenger numbers have been more or less near the mark of ten on the entire journey. It seems to pick up a few in Darlington and these get off at Newton Aycliffe, then there's nothing until you get closer to Peterlee where it also picks up a few.
Very few people do the full Arriva 21 route.