As far as I can ascertain, Flight (Airplane) Mode switches off transmitting functions. In some devices "Receive-only technologies like FM radio and GPS still operate if the device is so equipped." Wiki...
But, when in Flight Mode, WiFi and Bluetooth can be reselected to ON if allowed and desired.
That's correct.
I suspect aircraft manufacturers have been hardening aircraft systems to better withstand EMC emissions from pax equipment.
Or more accurately, the threat of EMI issues from wifi devices never existed in the first place, and the regulators just took an ultra conservative approach to the issue regardless of any specific evidence that there's a potential problem.
I'd be surprised if there were less than 30 active mobile phones on any given 737 revenue flight anywhere in the world!