I turned off bluetooth on my iPhone so it doesn't automatically connect to Airpods yet when I opened the case near my iPhone it still managed to offer option to connect. I saw similar dynamic on iMac when I turned off bluetooth yet I would get option to connect to mouse. Is there another way than bluetooth apple uses to communicate between devices?
When you use the Control Center to "turn off Bluetooth", you're actually not turning off Bluetooth. Pressing the icon means to disconnect from any connected Bluetooth accessory. It does not disable Bluetooth entirely, and thus a feature such as detecting the Airpods case being opened will continue to work.
If you go into Settings > Bluetooth and actually turn Bluetooth off completely, you'll find that the case open detection feature stops working.
First off, Apple AirPods and iPhone have more than one way to communicate.
Indeed iPhone uses Bluetooth protocol and hardware to transmit audio to the AirPods and from the AirPods microphones.
But AirPods also have a new way for short-distance data sharing called NFMI (Near Field Magnetic Induction) which is used to transmit status information when you open the lid near the iPhone.
This mechanism is so low on energy - that is is by definition always on. It is the same mechanism used for ApplePay when you place your iPhone near something you want to buy, or at the cashier when you want to pay. This is VERY reliable, does NOT rely on broadcast, and is very safe, because it is NOT bi-directional.