It states

The directory HOME_DIR is not created by default. However it will be created for non-system users if either the -m flag is specifed or CREATE_HOME in login.defs is set to true. However, it will never be created if the -M flag is specified.

However, --system states

Note that useradd will not create a home directory for such a user, regardless of the default setting in /etc/login.defs (CREATE_HOME). You have to specify the -m options if you want a home directory for a system account to be created.

This is also what actually happens. A more clear phrasing would be to rearrange the "for non-system users":

However it will be created if either the -m flag is specifed or (for non-system users) CREATE_HOME in login.defs is set to true.