Read this USCIS website carefully to understand unlawful presence and violation of status: - The "violation of status" during I-94 validity does not accure "unlawful presence" for the purpose of 3/10 year bar, but itself, as in its terms, does put one into out of status.
Following is an example from above referring memo.
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Example 4: An alien is admitted as a nonimmigrant until January 10, 2011. On March 15, 2009, DHS places the alien in removal proceedings, claiming that the alien had violated a condition of admission.
Because the alien was in "violation of status" (eg "violated a condition of admission", like H-1B does not work for his sponsor employer), it causes him out of staus, and brings him "in removal proceedings". The above alien is not "legal to stay in US" as you said.
Note: NOT every "violation of status" case will put one "in removal proceedings", in case someone might get themselves scared. :)
