Hello anonymous user and welcome to Microsoft Q&A. Thank you for your question.
Please allow me to explain the relation between pipeline successs/fail and activity success/fail.
The reason why the failure of an activity does not necessarily force the failure of the pipeline, are the use cases where you might expect something to fail, but want to handle it with a retry or alternative business logic.
The success/failure of a pipeline depends upon the dependencies attached to a failing activity. The shortest way to explain this is "If there is a success path, and that path is not taken, then the pipeline status is failure."
If an activity fails, and there are no dependent activities following it, then the pipeline fails. (In other words, if the last activity in a pipeline fails, the pipeline fails.)
If an activity fails, and it is followed only by another activity connected by a green on-success path, then the pipeline fails.
If an activity fails, and it is followed only by another activity connected by a red on-failure path, then the pipeline succeeds.
If an activity fails, and it is followed only by another activity connected by a blue on-completion path, then the pipeline succeeds.
If an activity fails, and it is followed by two activities, one connected by a red on-failure path, the other connected by a green on-success path, then the pipeline fails.
If an activity fails, and it is followed by two activities, one connected by a red on-failure path, the other connected by a blue on-completion path, then the pipeline succeeds.