When loitering, I've found that phones are a strong signal that distinguishes those uninterested in engaging with the strangers around them, from those that are. When trying to convey one's innocuousness to the wardens of a domain, it can be helpful to use your phone.

Related, if in a group, everybody else disengages to be engrossed in their phone, it can be helpful to do the same if one does not want to demonstrate a vulnerable dependency on the generosity of their attention.

A lot of awkwardness comes down to self-perception of vulnerability.

A paperback book or something can give the same social signal. :)

this, mainly.

Though if everyone else is on their phone, and the crowd is large enough, I find it fascinating to people-watch.

I'm a middle-aged white guy. In situations where everyone else is 20 years younger and dressed in half the clothing I am, I come across as a total perv if I look at anything except my phone. Or at least that's how it plays out in my head.

I do find it useful to sometimes be absorbed in my phone and not aware of what's going on around me. Or at least to have that impression.