That is how it works. Unwanted tracking notifications only trigger if separated from the owner for some time. It’s possible the paired iPhone was drained or had Bluetooth disabled which would cause the tracker to think it’s separated.
It’s not just that. When connected to an Apple Watch or Apple Pencil (for iPad) the quick toggle maintains these connections along with maintaining handoff and continuity functions between personal devices among other things. In these cases, I think having the quick toggle not fully disable Bluetooth makes more sense to prevent new connections while keeping the existing Watch and Pencil Bluetooth connections active to preserve functionality. Of course, I get that not everyone’s use case is the same, but I rarely need to fully disable the wireless radios. Particularly with Wi-Fi, I use the quick toggle to temporarily disconnect Wi-Fi if I’m on a bad connection away from home. When I return home or to my car (for wireless CarPlay), my phone will reconnect to the respective networks without me needing to remember to re-enable.
I believe Instagram usernames are reserved on Threads to ensure people can keep the same handle on both networks, but the users aren’t automatically signed up with a profile.
Is there a source on this? My initial fact check search suggests this was debunked.