If a creature is phased out, does it count as a legal target for spells and abilities?

A phased-out permanent is explicitly treated as though it does not exist for most game purposes. Comprehensive Rule 702.26m states that while a permanent is phased out, it's treated as though it doesn't exist — meaning it cannot be targeted, enchanted, equipped, blocked, or attacked.

The targeting rules (CR 608.2b) require that all targets of a spell or ability be legal at the time that spell or ability resolves. Since a phased-out permanent is effectively invisible to the game, it is not a legal target when a spell or ability is being cast or activated, nor when it resolves.

If a permanent phases out after being targeted (i.e., in response to a spell), the spell will have an illegal target when it tries to resolve. If all targets have become illegal, the spell is countered by the rules and has no effect (CR 608.2b).

Concrete example: Your opponent controls a Grizzly Bears (2/2). They cast Teferi's Protection during your turn, phasing out all their permanents. You then cast Giant Growth targeting Grizzly Bears. When Giant Growth tries to resolve, Grizzly Bears is phased out and no longer a legal target, so Giant Growth is countered and has no effect.

Note that very few things can interact with phased-out permanents — essentially only effects that explicitly say they affect phased-out permanents can do so (CR 702.26m).