Yes it sounds like there might be some sort of disconnect, as the template editor doesn’t make this clear, but keep in mind that FSE is still marked as being in Beta in the latest version of WordPress.
Templates in full site editing still follow the standard template hierarchy. So if you want a static homepage you should set one in Settings > Reading, as well as a page for your posts. With that done your Front Page block template will be used to render the front page, while the Home block template will be used for the posts page.
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