That is true, but "frog" is still definitely not the definition of "animal", even though a frog is an animal.
The red-eyed tree frog [1] is an animal, but it is a noncentral example of an animal, i.e., it is not the typical thing you think of when you think "animal". To the_mitsuhiko, the AGPL is a noncentral example of an open source license.
The term comes from the noncentral fallacy [2], which is about abusing noncentral examples.
[1] https://en.wikipedia.org/wiki/Agalychnis_callidryas
[2] http://lesswrong.com/lw/e95/the_noncentral_fallacy_the_worst...
This is an interesting example for the difference between "reading by the word" and "reading by the meaning" (there's not a good English word for this, but in Germany we call this "sinnentnehmendes Lesen".)
I also believe it makes sense. Perhaps i can restate it. the_mitsuhiko made five assertions:
1. The AGPL is not just an updated GPL, but expands the scope of the GPL's 'infective' property considerably.
2. Some people are uncertain about what exactly the consequences of using AGPL'd software are.
3. Because of this uncertainty, there are companies which will not use AGPL'd software.
4. The AGPL is an open source license, but it is neither the only nor the most representative open source license.
5. Some people wish to license their software in a way which maximises the number of people who can use it. That means not using the AGPL, because of point 3.