It occurred to me that I might be wrong about the locally stored database, so I conducted an experiment.

I put my phone in airplane mode, then went to my record player and played a song with my phone sitting nearby. Within a minute, my phone correctly displayed the currently playing song, despite having no connectivity whatsoever. This proves that there is a local database of songs against which the service can compare what it hears. Obviously the database does not include every song ever written, that would be ridiculous.

I never claimed that the phone was not listening, it has to listen in some way to recognize music. What I did claim, and have now proven, is that it can identify songs without sending the audio to Google.