I encountered the same message when iOS 16 had just released and wasn't available on my iPad yet. It wasn't a blocking message, pressing "OK" was enough to make it go away, and when iPadOS 16 finally came out I was able to clear it.
It's bad UX but the Apple TV can still be used as before.
Turns out, in my case at least, the warning was a little misleading.
It required me to log into their apple / icloud account and accept some terms, I did this with a normal browser (again non-apple) and the warning went away.
May be different in your case as I was setting up a new account for them.
I'm with you that it's hard to understood at a glance or without context...which is to me a perfect encapsulation of the whole situation, and what makes the discussion so interesting.
Which I feel weird about because I don't want to flag the story or the tweet or the comments... it's just the title specifically. So I kind of wish there were a way to flag a title. Hopefully it gets dang's attention and he'll handle it.
That attention is easy to get with an email. As to the story, it just becomes a story about an irritating periodic modal which is not very interesting once the title misunderstanding is gone.