Sending a new password i plain text does not mean passwords are stored in plain text. Sending and existing password, on the other hand, will prove it.

But how can they detect that an existing password is "too simple" when not stored? I guess it would mean walking through a huge list of "simple" and common passwords and compare with the stored salted hash of each user.

I think, nobody and no script should ever do such, except for anonymous research purposes. The stored hash, and corresponding user ID, should only be retrieved for the purpose of password validation.