Macbook stays connected to Personal Hotspot after lid closed

I have M2 Macbook Air, 2022. I mostly connect by Macbook to internet through my iPhone's personal hotspot.

I recently noticed that, after I close the lid of my Macbook Air, my iPhone still shows that the personal hotspot connection is active. In other words, my Macbook stays connected to personal hotspot even after the lid is closed.

Similarly, when I receive a Facetime call, my Macbook rings even when its lid is closed.

I have never changed any power setting on my Macbook. Above mentioned behavior is the same regardless of being connected to power outlet or using battery power.

Is this normal?