Yeah, exactly. When you're saying something was good for its time you're saying "back then it was good, but now it is flawed due to hindsight and/or comparison to modern games".
I don't know where you're getting this idea from but I don't often see people using the phrase to argue that it's still good today. Or at least not in the sense where "good" means the same thing. It's fine to appreciate the quality a game for being good in its time (one of the reasons I still like Puggsy), but I'd be surprised to see someone state that a NES game's graphics being top-notch back then means it's top-notch now, that... literally doesn't make sense.
I don't know where you're getting this idea from but I don't often see people using the phrase to argue that it's still good today. Or at least not in the sense where "good" means the same thing. It's fine to appreciate the quality a game for being good in its time (one of the reasons I still like Puggsy), but I'd be surprised to see someone state that a NES game's graphics being top-notch back then means it's top-notch now, that... literally doesn't make sense.