This is correct. I've been involved in these sorts of postings, and it was absolutely gamed. But for good reason: we already had the perfect person in the role and wanted to keep him.

Imagine if there was a law that required companies to post job openings for every position in the company, regardless of whether or not that position was already filled. As you can imagine, they would likely make the job requirements exceedingly specific for the roles filled by people they really like.

You don't even need to imagine, just go look at government or non-profit job postings. It's often the case that they similar ridiculous policies for promotions, where they already have a person they want to promote, but they need to open it up to public applicants first.