Is this true?

That talks about your URL not your actual directory. Keeping your files in public_html is fine as long as the URL is like so. https://site1.domain.com/ and not https://site1.domain.com/directory/.

That /directory/ is an option for stand alone WordPress but not multisite. That doesn’t sub-directories won’t work but sub-domains is fine.

(NOTE: Some may say that you can make it work but that’s a little more advanced and can break many things.)