Say you are flying along VFR and squawking VFR. You decide to make a practice approach using a nearby ILS. You contact approach control and request a "Practice" ILS approach. The controller is going to vector you for a practice ILS approach and typically state that you remain clear of clouds
What you said about the practice approach while VFR is correct.
This is how I do a majority of the approaches in my current job - even though ATC uses the phrase 'practice approach' and I'm not practicing.
But I were still IFR - as this F-16 would have been - you wouldn't be hearing that phrase. In Beaufort we had a stereoroute for 'practice approaches - though it is an IFR route and we would have been IFR the entire time - regardless of actual VMC/IMC conditions.