The sliced and bagged bread on the shelves is also more processed than the bread you might make at home or even buy from the bakery section of the grocery store. There's a reason it maintains perceived freshness much longer than bread you might make yourself.
I don't think their definition is a reason to discard the study. Drop the word "ultra" and it's still true that more than 2/3 of calories being consumed are from processed foods.
EDIT: The term "ultra-processed" isn't meant to be a perfect ordering of all foods' nutritional properties. That said, they didn't come up with arbitrary designations. They confirmed that the nutritional value of the foods deemed "ultra-processed" by their methodology was, on average, lower:
> “In additional analyses, we compared the composition of ultraprocessed foods to non-ultra processed foods using data from the 2017-2018 period. We found that ultraprocessed foods contain a substantially higher percent of calories from carbohydrates and added sugars, and higher levels of sodium, but also had less fiber and a lower percentage of calories from protein,” said the study’s first author, Lu Wang, a postdoctoral fellow at the Friedman School.
Trying to identify edge cases where their designation might fail doesn't invalidate the study. The foods in their ultra-processed category were confirmed to be, on average, nutritionally worse.