The confusion is justified to a degree – and other RDBMS like Oracle do have stored procedure parameters which can be of type IN (input only), OUT (output only), or INOUT (both ways – “pass by reference” type of parameter).
SQL Server is a bit sloppy here since it labels the parameter as OUTPUT, but really, this means INPUT/OUTPUT – it basically just means that the stored proc has a chance of returning a value from its call in that parameter.
So yes – even though it’s called OUTPUT parameter, it’s really more of an INPUT/OUTPUT parameter, and those IN, INOUT, OUT like in Oracle do not exist in SQL Server (in T-SQL).