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It’s source available, not open source.
It severely limits what can legally be done by restricting modifications and prohibiting “commercial” distribution:
You may not remove or obscure any functionality in the software related to payment to the Licensor in any copy you distribute to others.
You may distribute the software or provide it to others only if you do so free of charge for non-commercial purposes.
Non-commercial purposes is extremely vague by the way. Depending on the country - or even the court in a country - nearly everything distributed on the internet is for commercial purposes.
For example, in Germany, only commercial websites have to put up a legal disclosure consisting of address, full name, phone number and email. Yet courts have ruled that every single website that is available to the public is “commercial” - only private webpages available to a handful of people are non-commercial. If anyone redistributed the software in Germany this license would be grounds for a successful lawsuit.
Not at all.
Hardly any Lemmy instance is hosted in the US and other countries never had this section to begin with.
Most Lemmy instances already need to comply with laws making them responsible for keeping illegal content up.