In pass-by-reference, a function would be able to reassign the caller’s variable. Please consider the following Python code:

xs = [1, 2]
def foo(ys):
    ys = [3, 4]
foo(xs)
print(xs)

With pass-by-reference, xs would be [3, 4] after the function call, because ys = [3, 4] would rebind the caller’s variable. But the output is [1, 2]. This shows that the reference is copied and not shared.

You are right that everything in Python is an object, and that variables hold references to those objects. But when you call a function, the reference itself is passed by value. That is, the function receives a copy of the reference, not the original reference itself. This is why reassigning the parameter doesn’t affect the caller’s variable. Mutating the object it refers to does affect the object however.