The algorithm used is defined in WCAG: https://www.w3.org/WAI/WCAG21/Techniques/general/G18.html#te.... It does attempt to calculate the luminance but you might be referring to a more accurate algorithm.

Personally I don't find pure red on white very readable, but I have noticed some oddities such as pure black on orange (#ff6a00) passing the check while pure white on orange fails, despite being much more readable to my eye.