Set the model database to SIMPLE recovery. Create a new database and, as expected, its recovery model will show up as SIMPLE. Now backup the database. Then backup the transaction log. This last action should report that log backup is not allowed as the recovery model is simple. However, the log backup succeeds.
The production issue is that we have our model db set to simple, we create fixed size, no-autogrowing transaction log files. We insert data into the database and find that the log space used is constantly growing. It never drops and we encounter log full errors such as this:
'The transaction log for database 'xxx' is full due to 'LOG_BACKUP'.
The DBAs end up scratching their heads trying to figure out why a database in SIMPLE recovery reports log full for a batch of simple insert statements. Worst case is when we don't have a fixed size transaction log and the log keeps autogrowing.
If model starts off as full then you set the user db to simple then you get the expected results that log backups are not allowed.
Also, if model start off as simple and you set the user db to full and then back to simple you get the expected results that log backups are not allowed.