Basically this boils down to "don't build apps with similar functionality to twitter.com". While that may sting some developers, at least it's a pretty clear and unambiguous signal.
One nice thing is that they're spending time and effort to talk to their dev community. Much better than the Apple approach, which is to make large disruptive changes without warning or explanation.
To be clear, we are going to work hard to improve our product, add new functionality, make acquisitions when it's in the best interest of users and the whole ecosystem at large. Each one of those things has the potential to upset a company or developer that may have been building in that space and they then have to look for new ways to create value for users.
The message isn't just "don't build apps with similar functionality to twitter.com". The message is "if you build apps that provide value to the ecosystem or the users, we might decide to buy you (at our price) or copy you (and hence crush you) and you'll have to find something else to do."
So you pivot. Implement a feature that a niche will really like, but that the official Twitter app won't implement because it complicates things for those that don't care and fills a fairly small niche.
For example, I'd love to have a client that lets me filter extremely powerfully. I should be able to filter by any field (for example, filter out whose source is Ad.ly because it's all ads), use regular expressions, etc.
I think some apps come close, but I don't think any are quite as powerful as I'd like. Even if one is, there are plenty more niches to fill. An iPhone client that's not as pretty or feature-packed, but which loads instantly, for example.
I think a large part of that was the growing popularity of Twitter, the low barrier to entry for creating these clients and that Twitter.com took a rather minimal approach. Most of the Twitter clients early on were built just because the creator wanted something other clients or Twitter.com didn't have. But over time that changes and you begin to serve a section of the Twitter audience. So this begs the question; has the string of recent events changed the way Twitter client developers are able to server their market. If it has then Twitter should directly address that. If it hasn't but has confused people then it is important that Twitter is open about their policies and ideologies.
One nice thing is that they're spending time and effort to talk to their dev community. Much better than the Apple approach, which is to make large disruptive changes without warning or explanation.