No, it does not defeat the purpose. The purpose is making it easy to replace any part if something breaks - even if you’re a non-tech-savy user. The Fairphone makes repairing your smartphone as easy as assembling an IKEA shelf, which - definitely - archieves it’s purpose. You don’t need to buy a new phone if your screen is shattered or your USB-C-connector got dusty - just a replacement part.

Of course, having upgradeable parts would be nice, but that’s not as easy to accomplish as it might look: The individual parts would be sold less often, resulting in higher prices to account for development and production costs. And compatibility isn’t easy on low-level hardware: Installing a better camera could also require a better BUS or other connection to the mainboard etc. A bigger battery might need a better charging IC or at least more space in the housing. Same goes for any other component. And remember - the Fairphone 2 got a camera upgrade midway in it’s life cycle. So you can’t even say it’s not upgradeable.