This is true but lithium-ion batteries degrade even while not being charged or discharged, and this is worse at the extremes of the state of charge (including fully charged), and at higher temperature (and often a plugged in device is on constantly and therefore spends more time at a high temperature than it normally would), so it's still not great for the battery. A lot of devices have a mode where the batter is kept at a lower state of charge if it's been plugged in for a while to try to reduce this.

Some phones bypass the battery when plugged in, but not all do. I know it's advertised as a feature of some gaming phones because graphics-intensive gaming is one use case where you'd want to use the phone heavily while plugged in.