Unless E remained untouched because it was not rewritten, and ended up staying parented on B instead of getting reparented onto B'.

Which is usually not what you want; most of the time you want E', which is E reparented onto B'. But sometimes you want E to remain untouched and stay parented on the original B. Depends on the situation.

Exactly, but the second graph where untouched E is reparented to B' is not something that git would allow.