Fore those not familiar with the Apple ecosystem, what does "Find My" do? locate apple devices ?
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So AirTags, MacBooks, and turned-off iPhones are findable via passing-by turned-on iPhones.
Maybe it's just me, but if I own an internet-connected device and I turn it off, I expect it to be off. That an iPhone's definition of "off" means "you can't use it but other random people's iPhones in the vicinity can still connect to and ping it" rubs me the wrong way.
The engineering and thought that went into the whole thing to be useful but also privacy protecting is actually pretty impressive, and exactly the kind of thing we should be encouraging companies to do if we care about privacy. Especially since as you point out, you can still easily turn it off at any point if you want.