Of course, they don't call it that, they call it "unlimited vacation."
And yes, it means exactly what you said, whatever name it goes by.
It really does show there is something sick in the culture when companies sell it and workers accept it.
You should really redirect your anger at your company culture.
We have "unlimited vacation" where I work.
Even a couple years back when things were not looking good most people took about 4wk which in practice is more like 5wk if you utilize the days off we get before/after major holidays. It's common for the H1Bs to pick a random month and use that time to go home to visit family. I took 3wk or so and it came up in my performance review and I was encouraged to take more if I wanted to. It's not just my team that's like this either.
One of the many reasons I prefer to do tech somewhere other than the overpriced west coast meat grinders.
But, an ugly side effect, is because there is no allocation, there is also no forcing function for people to "use-it-or-lose-it" - which also means when you are in crunch-time (which defines every startup I've ever worked for in the first 4-5 years) - it effectively means no vacation, excepting Christmas, which still seems to be untouchable (so far).
Either way it sounds ridiculous.