I don't think that's correct, or at least not everywhere. From what I get, when you're laying off people for economic reasons, you need to make vertical cuts of services or roles that underperform economically, but you can't use individual performance as the basis.
Going from 10 people on a team to 8 and not planning to re-hire back up to 10 is also closing out roles.
Legal details and jurisdictions may vary, but as far as I know, you can absolutely cut part of a group (or part of the entire company), not just entire groups/divisions/etc. And you can apply uniform company-wide criteria to select the subset of the group to lay off.
I agree. My understanding of layoffs is you're closing out the role, and thus, the person holding the role loses it. This is separate from the actual performance of said person. Conversely, for a poor performer, you're cutting off the person but intend to refill the role with a better one.