You left out the part where they say it IS okay to use it on the backend of a hosted application or service. The way I read this is that they are reserving the

You left out the part where they say it IS okay to use it on the backend of a hosted application or service. The way I read this is that they are reserving their right to build an API product like OpenAI based on this model, and control that particular part of the market. So it can't just be a wrapper putting another brand on it that is open to general purpose use of the model. But you can build hosted chat-based applications. They just need to be applying the model to some use case.