If you and I toss a football back and forth 100 times, we’ve technically exchanged 100 footballs, although we only actually have one football.
Shorted shares are sold on the open market and they usually are sold to traders with accounts at brokerages that also allow share lending, so when that share is purchased, it’s usually able to be freely lent again. Short interest is the count of how many short transactions are currently open only, it’s not a count of shares sitting somewhere that are untradeable.