Thanks I went through that and all looks fine. I opened support case and looks like a limitation. This is what they have said:

"I have reproduced and performed research with my Tech lead on this from the back end, My results show that the issue is by design for all Hybrid setup with on-prem Exchange server.

This was confirmed and verified by my Technical lead as well. As long as the presence changes correctly when in a meeting and out of a meeting, then you have nothing to worry about.

The upside is that a few Exchange online customers have also shared their dissatisfaction with this because their presence goes to busy when they haven't joined the meeting or on a call in teams."
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