I think that's not completely accurate. In physics and math and probably other hard science disciplines, yeah, you are correct, a masters means "thanks but you're not gonna make it to a PhD".

I have a masters in Computer Science from UW-Madison and I had nothing to do with the PhD track. I just wanted more learning and the CS department was happy to provide it. There was no stigma associated with a masters degree there and it's definitely helped me in my career.