Correct. There’s nothing Nunchuk does uniquely regarding backups. You can use Nunchuk with other hardware signing devices (for which seed generation/backup should be handled separately on the hardware), or you can use a Software key, which Nunchuk generates and gives you the seed phrase for.

The scenario the OP mentioned specifically has to do with an edge case where user created a hot wallet (with a hot key that you can back up later), then CHANGED THEIR MIND and delete the hot key AND REUSE THE SAME HOT KEY (that user hasn’t backed up) in a multisig wallet. This might warrant a fix, but not how the majority of people use Nunchuk.