Refers to management and autoscaling, not whether physical hardware exists somewhere. From your point of view it has DNS entries, you've defined how high/low it's allowed to scale and some other configs, you've defined network access rules, and allows client connections. That's it. You don't manage the server instances. Hence: "serverless"
Thank you for explaining. There must be a better term than serverless though. "Auto-scaled cloud database" would be more accurate, for example