What are the 'phases' in this 2D scaler filter
My best guess is that they limit the available interpolation points to 16 discreet points in x and the same for y, and so any fractional scaling where a sample point falls between 2 of these 1/16th sampling points, will just use the closest point to it?

Yes, that's it.  Probably on the assumption that within 1/16 of a pixel shift, and with the further interpolation on the output, that filter will be good enough.