It does. They obscure the usage of non-free hardware/firmware by not shipping it as part of the OS, but as a bundle on separate flash storage that is loaded into the OS by initrd. That blob is updatable as "firmware". The 100% free open-source is just marketing. It's just for the OS. A lot of the hardware and firmware is proprietary.
https://github.com/linuxboot/heads/blob/c859c28b88b7bc197c16...
> The 100% free open-source is just marketing.
100% FLOSS is in the OS: https://news.ycombinator.com/item?id=25504641. It is not the end of the road, but this is the only phone that can run such OS.
See also: https://news.ycombinator.com/item?id=47943487