MongoDB replica set node failure without arbiter
The context you are missing is that failure of a replica member does not affect the number of configured members the replica set has (or the required voting majority to maintain a primary). Any changes in fault tolerance or replica set election requirements will involve a re-configuration of the replica set (eg. adding/removing members or changing voting members) rather than a replica set member state change (eg. DOWN, RECOVERING, ..).

A three node replica set with one down member still has three members (with a strict majority of two). If you think of it as analogous to a RAID configuration, a three node replica set with one member down is running in degraded mode and cannot tolerate the failure of any further voting members. This allows for continued availability, but you will want to recover or replace the unavailable member to return the replica set to a healthy state.

You can check the current replica set configuration with rs.conf() and the current state of members with rs.status().