A common mode I have seen is phone in lap, front-facing camera ingests an exam page hung over the edge of the desk. Student then flips the page and looks down for the answer.
Administrations won't allow it because they just don't care enough. It's a pain dealing with complaining parents and students.
In any case, cheating has existed since forever. There is nothing much new about cheating in in-class exams now with AI than before without.
AI is transformative here, in toto, in the total effect on cheating, because its the first time you can feasibly "transfer" the question in with a couple muscle-memory taps. I'm no expert, but I assume there's a substantive difference between IDing someone doing 200 thumb taps for ~40 word question versus 2.
(part I was missing personally was that they can easily have a second phone. same principle as my little bathroom-break-cheatsheet in 2005 - can't find what's undeclared, they're going to be averse to patting kids down)
Large lectures have hundreds of students, and to properly proctor an exam for one of these classes, one needs dozens of proctors.
It can be done, but observe: for most faculty, maintaining the integrity of their course does not aid them on the path to tenure/advancement.