At first look, I thought a value with type A with T can not be a
subtype of B
There's are two misconceptions here. First, that the static type of an instance has any bearing on the result of isInstanceOf: there is none. To be clear, when doing a.isInstanceOf[B], the fact that a is of type A with T is not relevant.
The method isInstanceOf is implemented at the bytecode level by the JVM. It looks at the class information every instance carries, and checks whether B one of the classes (the class of the instance itself and its ancestors), or one of the implemented interfaces. That's the "is-a" relationship: "a is a B".
Technically, isInstanceOf is part of Java's reflection, where it is known as instanceof.
The second misconception is the inheritance can somehow remove a parent type. That never happens: inheritance only adds types, never removes them. The type A with T is an A, a B, a T, an AnyVal and an Any. So even if isInstanceOf did look at the type A with T, it would still return true.