Background music still plays through if “Mute Audio On Focus Loss” is enabled. That includes (but probably not limited to) the FiveM main menu background music, server loading screen intro music, custom server radios, and audio streams in general.
When “Mute Audio On Focus Loss” is enabled in the game settings, all audio should be muted when the game is in background or minimized. Currently that doesn’t apply to FiveM audio streams in general. In fact, the server loading screen intro music still plays through even if “Music Volume” is set to 0 in the game settings, or at least that happens in every server i play. However, there’s no way for me to know if this happens in every server, so i can’t be certain of whether this particular problem is related to the FiveM engine itself or not.
In any case, “Mute Audio On Focus Loss” seems to have no effect when it comes to any audio that plays through the FiveM engine.