Why is Final Cut Pro X still copying video files into the "original media" folder when I have the "leave files in place" option selected?

I have the "Leave files in place" option selected under IMPORT preferences.

Yet, when I import video files from the native apple photos app within final cut using the photos browser, it is still copying/duplicating those video files into the "original media" folder inside of the final cut pro x library package file.

Is this supposed to happen or is this a bug?

This is not, according to my understanding of this option, what is supposed to happen. I expected to see an optimized file created in the final cut library package and nothing sitting inside of the ORIGINAL MEDIA folder.

The reason why I want to use this option is to save hard drive space. If the video file is sitting in apple photos, why copy it into the ORIGINAL MEDIA folder when I request it not to?

A bit confused.

Thanks