It simply means that they can have whatever the hell kind of method they use to identify specific images, and the scary part is: there IS an error-margin built-in because otherwise, as you said, this tech would be pretty useless.

"Find all images and tag them if they look like this fingerprint" doesn't mean that. It means: "Find all images and tag them if they look 80% like this fingerprint".

Which also means that it will allow governments to upload photographs of people's faces and say: "Tag anyone who looks like this".

Worse, this will allow China to track down more Uyghurs, find people based on guides in the form of images that are spread around to stay safe from the Chinese government, and countries like Saudi Arabia can start looking for phones with a significant amount of atheist-related images, tracking down atheists, and killing them. Because that's what that country does.