We actually aren't too far off from that reality. There are several models you can run fully offline on your phone (phi-3, Gemma-3n-E2b-it, Qwen2.5-1.5b-instruct all run quite well on my Samsung S24 ultra). There are a few offline apps that also have tool calling (mostly for web search but I suspect this is extendable).

If you want to play around a bit and are on android there is PocketPal,ChatterUI, MyDeviceAI, SmolChat are good multi-model apps and Google's Edge gallery won't keep your chats but is a fun tech demo.

All are on github and can be installed using Obtainium if you don't want to