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You know, I think that a good way to look at this is to step away from the computer and look at Tabletop gaming, specifically Dungeons & Dragons.
Back in 2000 or so, Wizards of the Coast (aka WotC) Put out the third edition rules of D&D. They also did something unheard of at the time, and that was put out both the Open Gaming License (OGL) and the d20 License. This opened up the market for third party D&D books. White-Wolf, Mongoose, Necromancer, AEG, and Green Ronin all got into the D&D buisness. Everything was relatively hunky-dory until somebody decided to make a D&D book about sex.
The "Book of Erotic Fantasy" was a d20 Licensed product, until somebody at WotC (which is a subsidiary of Hasbro) decided it was inappropriate for the D&D brand (Kind of ironic, because they had just released their "Book of Vile Darkness", which was much worse IMHO). So the book had to be reworked, taking into account the more restrictive OGL (Not allowed to make reference to certain monsters "Original" to D&D like the Illithid, etc.) The book finally did get published, but didn't sell as well due to not being an "Official" D&D product and therefore not having the logo on the cover. I'm sure someone at WotC would have liked to squash the book altogether, but the rewrite followed the terms of the OGL to the letter and therefore allowed it to still be released.
To make this relevant to the current discussion, the Blizz API is like the d20 system: It's the core framework of the product you are making. Like D&D, you can write whatever adventures, make whatever monsters, etc. that you want (Read "Write Code") But if you want to share that product (and your code is a product) with the general public, you have to abide by the OGL or d20 License (read "Blizzard Addon Policy") or find a new game system (read: "A different game's API") To release it under.
Incedentally, the thing that made WotC pull their d20 License on that book? Not the sexual situations covered by the book that they allready knew about and approved the license for. What made them change their mind was the fact that the book used real photoshopped photographs for the artwork. And frankly, having seen the book, the only photo in there I found even remotely offensive was the Goblin Fertility goddess. Ewwwwww.
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