I get the feeling it's basically an old-fashioned application server like Wildfly or Tomcat. So the developer doesn't worry about system-d config or whatever, but just adds their application files to a folder. Of course someone needs to maintain the application server, however it's deployed, but it detangles things a bit. I personally think this makes no sense unless someone else hosts the application server. Maybe in an enterprise context of some sort. Otherwise this feels like a tried-and-failed idea.

Well at that point you'll obviously start having to think about it. The point is you can easily move to self-hosting without rewriting everything.