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Based on the documentation, that was my initial understanding. However, I verified this in the DemoPoint lab and confirmed that Gateway members on both sites are Active, with the Site 1 SMO acting as the Pivot. At the time, Site 1 had two members and Site 2 had one.

After moving one member from Site 1 to Site 2, the Pivot shifted to Site 2, and the cluster transitioned to a full Active/Active state.

Does this mean the gateways which are active instandby site can't process any traffic?

One gateway per site

Adding gateway 2 to site 1

Two gateways in site 1 and one gateway in site 2

Two gateways in site 2 and 1 gateway site 1. Gateway member 1 in site 2 is the Pivot