Maybe the "when this is turned off" bit not actually turning it off? That's not exactly up front. It could easily have not been called "turned off", like "OS use only" mode or "bluetooth not function except as a spy tool for Google" mode, something snappy ...
I suppose you have no problem with people calling things purchase when they mean short-term rental, either.
Do you really think it's called "off" when it's not off for any other reason than to fool users? They could make "off" actually mean off very easily.
Don't falsely quote, it's a disservice. The settings page never says "when this is turned off". It says what's happening in incredibly plain language and provides a link to the other settings which could confuse a user really attempting to fully disable the whole Bluetooth stack including OS level access. As others have stated, wanting to disable the ability of pairing is sometimes wanted while still allowing something like high precision location through Bluetooth scanning or other forms of 2.4GHz radio sampling. It's not entirely unreasonable for such a feature to exist, so to me it's not an unreasonable settings structure. Had they hidden the setting which could be conflicting with the user's request to disable all Bluetooth I would understand your point, but it's pretty clear what's happening when looking at the settings page.
Misquoting and falsely assuming things of others does a great disservice to your argument.
I don't see how this is fooling the user. Its pretty direct in stating what's happening and provides a link directly to the additional settings.