I've seen things like this before. Sometimes it's with positions that require you to be "on call" for after work issues then having a second job could interfere with that. Other times I've seen it are with positions dealing with programming. If you have a side gig or second job there could be code leakage between the two or they could be in competition.
If it's concerning I would ask them about it. Find out the reason for the it being there. Another possibility is that there could be one contract that covers both management or principles of the company and normal employees. That language could be there primarily to apply to a managers or principles and not to just average employees.
Asking them about it can determine why it's in the contract and would open the door to the discussion of how you don't feel it applies to the position you're working. This can allow you to edit it out of the contract and see if they agree.
Contracts are not one sided dictations they are a negotiation between two parties of the conditions they've mutually agreed to. I would never work for a company that wanted me to sign an employee contract that did not allow me to make amendments to that contract.