Contacts in Phone App
Phone App uses the following Microsoft API; https://graph.microsoft.com/v1.0/me/contacts to get the personal contacts of the user. These are usually reflected in the Teams client and the contacts tab in the outlook client for the user.
More information here: https://docs.microsoft.com/en-us/graph/api/user-list-contacts?view=graph-rest-1.0&tabs=http
Manual Add/Edit/Remove Contacts
Phone App has the option to manually create your own contacts. By utilising Microsoft's Graph API's your contacts are stored within the users personal contact list within 365 and Outlook.
Bulk Upload is also available using a CSV file. (template available at bottom of KB)
To Edit or Delete a contact see the three dots which provide the options per contact.