Powder coating doesn't prevent rusting?

Powder coating is a surface coating system like any other paint. It protects the exterior surface from water and oxygen wherever it is intact and of adequate thickness. Powder coatings tend to be very hard and durable coatings.

However- if you have articles made out of hollow sections, there's an interior surface to worry about. Then there's damage of the coating- anywhere bare metal is exposed or the coating comes disbanded from the substrate, the substrate will corrode and the corrosion will mine under the nearby coating causing it to lose adhesion.

Powder coatings tend to go on bare or phosphated steel surfaces. I don't recall if they remain adherent over a zinc plated surface or a hot dipped galvanized surface. Zinc plating or galvanizing can give you additional protection by acting as a sacrificial anode to protect the metal on interior uncoated surfaces or at places where the powder coat is locally damaged.

Powdercoating is an excellent method to improve corrosion resistance for many materials. Use a powdercoating that is resistant to various corrosive species and high pH corrosion products (e.g. epoxy-based coatings). Use a zinc-based coating on steel and then topcoat with powdercoating for improved performance. Here is an article describing some ways to avoid problems with powdercoating over zinc:

As far as I remember, there are polyester coatings, epoxy coatings and polyester-epoxy hybrids.

The epoxies offer excellent corrosion and solvent resistance but have comparatively poor gloss retention in sun, tending to go chalky. The polyesters are the opposite.

We use polyester powder coatings on top of phosphate washed new steel for guardrails and find that it gives excellent corrosion resistance and gloss retention in that service.

Powder coating needs to be professionally applied off-site after very thorough cleaning (dip bath after sandblast is best), melted in the powder coater's furnace to form the sild skin, then shipped back to the site for installation. Once on site, it is almost impossible to get a good-looking and workable powder coat surface locally - after final welding for example, or if scratches or scars are cut in the outside plastic layer by a crane lift or accident.

So you have to be able to assemble the product completely with no scars and cuts, or make due with lousy hand-repainting. So a handrail, for example, can be powder coated, shipped back to the site, then bolted in. It will last pretty well if not scarred or broken. And most handrails do pretty well for many years. Not forever though.
A rail near a truck ramp or a forklift area is going to get scarred quickly. If painted, it can be repainted. If powder-coated, it will rust quickly at every scar or cut.

If you have a assembly item, recognize the powder coat is very think, and will vary in thickness considerably like a very thick, very sloppy coat of paint. So it will cause problems shutting lids tightly or bolting on later parts in the assembly.. get it on the wrong surface, and you have rub off or scarf off the powder coat to get the "flat surface" again. Ugly and bad-looking, source for later rust obviously. If you have a assembly part exterior, then you have to either shield the inside from the powder coat and heat somehow.

Obviously, you can't powder coat a watch, a car door, or anything with pieces that can't stand the oven temperature.