> Haven't used --update-refs, but reading it, it should result in your third graph.

I don't think it does. I tried locally:

  mkdir test; cd test; git init
  touch a; git add a; git commit -m 'a'
  touch b; git add b; git commit -m 'b'
  touch c; git add c; git commit -m 'c'
  git checkout -b branched-feature HEAD~
  touch d; git add d; git commit -m 'd'
  git checkout main
  echo 'change' > b; git add b; git commit -m 'fix b'
  git rebase -i --root --update-refs

  * commit (HEAD -> main)
  |
  |     c
  |
  * commit 
  |
  |     b
  |
  | * commit (branched-feature)
  | |
  | |     d
  | |
  | * commit
  |/  
  |       b
  |
  * commit 
  
        a

  * commit (branched-feature)
  |
  |     d
  |
  | * commit (HEAD -> main)
  |/
  |       c
  |
  * commit
  |
  |     b
  |
  * commit 
  
        a

Huh.. That's a shame :(. Maybe what it refers to is if you had a branch on B rather than D, it might update that.

EDIT: Yeah, this seems to be it. `git branch b` on b, then `git rebase -i --update-ref @~3` from main caused branch ref `b` to move from d86229e to 02fcaf7:

  * 1e354fb (HEAD -> main) fix b
  * 40e6f70 c
  * 02fcaf7 (b) b
  | * f4188e0 (branched-feature) d
  | * d86229e b
  |/  
  * 5fe78fa a