If you're a designer and you take "billboards or t-shirts or anything in the real world that is copyrighted" as stored in your head as the basis for something you're working on, you will need to consider ways in which your derivative work may be infringing.
Similarly, no, the space where copyright meets training data doesn't "means Waymo, Bing, Google are all illegal." Nobody is going to care if a driving or search neural net has that billboard or t-shirt data, because their function isn't to output copies or derivative works.
If the function of what you're building is to output billboards or t-shirts or anything in the real world that's copyrighted, then you may violating the spirit of copyright law whether you're wetware or using silicon. And whether or not the letter of the law has been refined carefully to apply to the issues at hand.
The creators of stable diffusion didn't create it with the intent helping people infringe on copyrights either. But some people will use it for that purpose.
It's all bad. They really should pay the "little man" not just publishers with lawyer budgets - same with AI.
~~robots.txt~~ ai.txt for code repos? :P