that's the most puzzling bit. Do they not want to anyone offering anything that could compete with any of Hashi's products to be able to use terraform binary at all?

if so, that's similar to proprietary programming languages. Not a thing. The community can just agree on a similar but open alternative and the original company is left behind. That's why all languages and frameworks are open-source with permissive licenses.

and if not, if it's just about the hosted / managed parts - then what exactly is it that I can use wrongly? Terraform Cloud / Enterprise was never open source. There's nothing I can self-host and charge users for...