I think the 'waist' in this case is just 'interface', in the general sense - i.e. where two pieces of software meet.
You make the {N-waist-M} composition problem easier because not much detail can leak from N to M and vice-versa. N and M only need to know about e.g. JSON to compile, not each other.
I'd consider a slightly fatter waist to be something like LLVM. My language is wide and complicated, and all the various assembler outputs for different architectures are also wide and complicated, and the idea of LLVM is to bridge the two, but it still feels like it would be a pain to couple my language to LLVM (JSON is narrower than LLVM)