iPhone 4s capacity under "General" in "About" is listed as 12.5 GB

12.5GB is correct, as in earlier iOS versions capacity was calculated in binary not decimal as it is now.

The iPhone contains 16000000000 (16 billion) bytes which in decimal is 16GB.

However iOS 9 10 and earlier calculated the storage in binary format. Which means 16 billion bytes around 14GB minus whatever is used by the system.

See here: How iOS and macOS report storage capacity - Apple Support

It is not, and has never been false advertising.

Also the iPhone 4s is old, Apple no longer make it nor advertises it.

No, it's not even close to 'false advertising'.

This has been an issue with electronic storage since the early days of computing.

The OS works in a different base math system than we do.

Some of the difference is due to overhead, some of it is due to the difference between the way that manufacturers count and the way the OS counts...

The specifications you see on marketing literature, etc. from pretty much every manufacturer on the planet counts 1 GB as 1,000,000,000 bytes.

The OS, using binary math, counts 1 GB as 1,073,741,824 bytes. The difference adds up rather quickly.

The OS, using binary math, counts 1 GB as 1,073,741,824 bytes. The difference adds up rather quickly.

I thought Apple stopped using the old method back with OSX 10.6, though I don't know if they stuck with the old method with iOS. https://en.wikipedia.org/wiki/Mebibyte

It's been that way with pretty much every computerized thing I have seen in the past half century. At least now devices are using base 10 instead of base 2 in reporting capacity. It used to be you buy something with a couple of billion bytes capacity but by the time you finished formatting and diving the billions of bytes by 1024 (instead of 1000) a couple of times over you really shaved a lot off the reported availability once it was inside your hardware.

Hmmm... I'll have to double check. You may be right.