There aren't a lot of details available yet, but yes, I believe you misunderstand the device. It is a camera, albeit a simple one. It has a film back, a manual shutter, and a fixed focus lens to collect the light from the phone screen.
This doesn't differ much from my 8x20 banquet camera with a shutterless lens mounted. They both have film loaded into a film holder. They both have a shutterless lens to gather the light. Both have a manual shutter or darkslide to start and stop the exposure. In the case of my banquet camera, I can pull the darkslide and use a hat as a shutter. The Impossible Instant Lab just has a darkslide and doesn't need the hat.
The iPhone app calculates the exposure time, displays the image, and notifies the user when the exposure is complete so he can close the shutter / darkslide on the Instant Lab. It can optionally apply special effects to the image. That is a little fancier than what the sun does by simply emitting light that is then reflected by the objects it strikes, but photographers regularly use light meters to calculate exposure values and use apertures, shutters, watches, timers, or counting to control the exposure. Not a great deal of difference, really.