I had a little thinko. The behaviour which is correct which I was referring to was when the machine is unhomed.
So I can observe the same you mentioned in
forum.linuxcnc.org/gmoccapy/37676-ignore...-out?start=10#270021
When the machine is homed the limit switches switch (inside the soft limits) triggers a "machine-off". So far so good. But as soon you check the "ignore limits" checkbox, this limit switch will never be triggered in this session. Even if you uncheck it or clear and reset the limit switch input. Only other limit switches are active. (This is for 2.9 as the checkbox is not grayed-out there in this case).
I have a suspicion that it is somewhere in the LinuxCNC core.
The docs say: "The OVERRIDE_LIMITS command prevents limits from tripping until the end of the next JOG command." But it doesn't say anything about homed or not.
I need to doublecheck with Axis, but there I miss the "ignore limits" check box.
Can you check with Axis?