"On my phone" Account option greyed in notes app - os10
Oh. You don't need to be worried about that. That simply says that there is "On my iPhone" section turned on but you haven't saved any note on that section Folder. All your notes are saved in the iCloud section folders. 

There is nothing to be worried about. That is normal since you haven't saved notes on your phone but in iCloud section folders.

So if you want to make that toggle not greyed out, just goto Notes app -> click on left upper corner "&lt;" mark. 

1) Then you would see ICLOUD and ON MY PHONE sections and under both of them some folders named Notes or whatever. ( if you see folders under ON MY IPHONE section, just avoid 2) and goto A )

2)Or you may see no folders under On My iPhone section. If you see no folders, then create one using any name.

A: Then simply make a new note in any folder under  ON MY IPHONE section and save on that folder (just simply get out of that note. It would be automatically saved). Then check the settings. Greyed toggle may normal now. 

Use this link to lean more about Notes : https://support.apple.com/en-lk/HT205773