Narrated by Jubair bin Mutim: I heard Allah's Apostle saying, “I have several names: I am Muhammad and I am Ahmad, and I am Al-Mahi with whom Allah obliterates Kufr (disbelief), and I am Al-Hashir (gatherer) at whose feet (i.e. behind whom) the people will be gathered (on the Day of Resurrection), and I am Al-Aqib (i.e. who succeeds the other Prophets in bringing about good)."

[Sahih Bukhari, Volume 6, Book 60, Number 419]

The Prophet (salallaahu alaihi wasallam) did not obliterate disbelief, but he was in the process of doing it, and his legacy continues on as we, the ummah, continue with da’wah (obliterates).

It is stated that all disbelief will come to an end (obliterated) after the return of Jesus; so how is this to be understood in this statement:“I am Al-Mahi with whom Allah obliterates Kufr (disbelief).”

The Prophet (ﷺ) obliterated kufr and defeated it, if we look at the condition of the Arabian peninsula before Islam, after and the time of his death. The idea is not to have a total obliteration where there are no non-believers at all because that goes against Allah's Decree and Wisdom. He has decreed that some people will never be Muslims and they will enter Hell, and that is why He created Hell.