All the cementite forming is just a transient phase on the way to nirvana; it will decay into pure carbon (graphite) and iron in due time. Due time, however, means millennia and more at room temperature for plain carbon steel. Cementite, in other words, is a very long-lived metastable phase under normal conditions. It thus makes sense to use it for something that is not a true phase diagram for purists, but that sane normal folks will call "phase diagram" anyway. We are also justified in doing this because the "real" iron graphite phase diagram looks almost exactly like the iron cementite "phase diagram". Here is the proof:

Iron, Steel and Swords script Page 1 Iron carbon phase diagram in comparison to the iron cementite phase diagram Does that mean that we don't have to worry about graphite being formed? Yes and no. Like almost always, it depends: For plain carbon steel with carbon concentrations below 2 %, you needn't worry, indeed. Graphite is never formed and the usual phase diagram covers everything nicely. For cast-iron , with carbon concentrations up to a few percent you need to worry. Graphite might form, depending on conditions. For alloy steel, the usual thing nowadays, you need to worry, too. Some alloying elements, in particular silicon (Si) but also nickel (Ni), promote graphite formation. Iron, Steel and Swords script Page 2