What does wireless.guest.isolate actually do?

The docs say:

Isolating clients

Isolate guest clients from each other. Some hardware or drivers might not support this option.

uci set wireless.guest.isolate="1"
uci commit wireless
wifi reload

Does it really just stop communication BETWEEN devices on guest network? ex. can a phone on my guest network still connect to a pc on my main network?

It stops internal bridging within the AP driver. Devices that are connected to the same wifi AP (all of them would be guests) should not link to each other. As noted, whether this will actually work varies. And if you have a layer 2 connection (wired, mesh, or WDS) between two APs on the same guest network, guests on one AP could still link to those on the other AP.

Isolating the guest network from the main network is done in the firewall.