but they don’t create a public profile for users that don’t sign up? it uses the same handle as your Instagram. If you never activate Threads then nothing happens with your IG username on Threads

not really. If the account never activates on Threads then nothing happens. It’s just a convenience. If they don’t offer this feature then you have to consistently keep checking to see when your friends activate their account and go find them. It’s objectively a worse experience to do it that way

ITT: no one who actually went through the sign-up process. It's like a 3 step process. Eventually you get brought to a screen that asks if you want to follow all of your current followers on Instagram. You can choose yes or no to all the people you currently follow, or you can individually select who you want to follow in Threads the people you follow on Instagram. If you select anyone that has not yet activated their Threads account it literally tells you that nothing will happen for now, but if and when the user activates the account, you will follow them if they are public or it will request to follow them if they are private.

There's no magic happening here. There's no shadow accounts...you use the SAME login for Instagram and Threads. They obviously know when you activate your threads account and it will just show the list of users who have already completed the signup and requested to follow you