I agree that's probably what the OP meant.
I guess there are two strategies that could be compared...
1) Fully charging and then "fully" discharging
2) Partial charging and partial discharging
As I understand it the life of Li-Poly depends on the depth of discharge so I would expect option 2) to be slightly better.
See Table 2: "Cycle life as a function of depth of discharge"
http://batteryuniversity.com/learn/article/how_to_prolong_lithium_based_batteries
Compare 100% DOD with 50% DOD. Sure in the case of 50% DOD each cycle only delivers half of the cell capacity per cycle but you get more than double the number of cycles (1200-1500) compared to a 100% DOD (300-500).
If you take that further and only use a 25% DOD each cycle delivers only a quarter of the capacity but the number of cycles is more than 4 times (2000-2500).
So it looks like keeping it topped up and doing only shallow discharge cycles is the way to go. However I think it's more complicated than that. For example other data on that pages suggests disconnecting the charger before the battery is fully charged might extend the number of cycles the battery can perform.
Some chargers are also more powerful than others. One I have that can deliver 2A. That might be enough to charge and power the phone so it's not clear that using the phone while on charge involves any discharging of the battery. The original charger was only 500mA and it's possible the battery might switch from charging to discharging and back again depending on what application I was running.