I think you're being a bit lenient in your interpretation there; I saw this on other threads, too, where people though this meant that they could get around an entry ban to, say, France, simply by transiting in Germany, or the Netherlands, or wherever, on the way to the country they "otherwise" would not be allowed to enter.

However, that is clearly not the case, nor the intention.

For as long as the "transit passenger" is heading to a third country (i.e. outside Schengen) then yes, the passenger will clearly be allowed to travel.

But if the passenger is en-route to a Schengen state from outside Schengen/EEA/UK/CH then the lenient interpretation given above no longer applies. So: US-EU-India - fine; US-EU-EU - not so fine.

This would be highly advisable!