I’m not sure if this is a bug or a design choice, but once into the character select screen everybody on your contact list gets the “X is online” update before one can choose to change the status to “offline” from that screen (at which point everybody on the contact list gets “X is offline”).
That, unless I am missing something, seems to defeat much of the point in having an “offline” option since everyone now knows you’re online anyway.
Additionally, when changing characters while offline, people briefly appear in the guild roster as online.