Reddit is also in the App Store. It has a significant amount of adult content. They also had some very legally questionable subreddits as well, which they tried to clean up before going public, but I can only assume it’s a cat and mouse game.

I think it’s a user generated content loophole. Since the app it’s explicitly for that stuff, it’s just that some users post it. Web browsers get a similar exemption, there is all kinds of stuff on the internet.