If I steal your device, and you didn’t have faceid, I have both factors. But if I steal your password, or find it in a leak of another site because like most people you re-use passwords, then I only have one factor. It still provides a fair bit of security because of that.
2FA on the same device secures against your login credentials becoming known to another party, e.g. by fishing, password reuse, database leaks, etc., which are real threats. It is not meant to protect against someone being in possession or full control of your unlocked device, which is of course also a real threat, though possibly less common.