It’s just important to know that you’re depending on the device and manufacturer. I see people in African countries getting Bitkeys gifted, they will not be able to replace the device without high costs as they are not distributed in their countries. And then they can’t access their BTC.
Discussion
You're right but to be perfectly clear, they can spend within the set limits, using the phone part with the cloud part. That is a recovery scenario that is well defined and part of the trade-off.
I believe there is also a like 6 month wait period option, to unlock the whole balance, if spending within daily limits is too restrictive. These are just company policies, you can spend the entire balance, theoretically, with the phone part plus the Block server-side part.
Nope, I was wrong, I was thinking of the Delay and Notify part of buying a new hardware device.