I'm really not sure how the TOS apply given it opens with:
This Terms of Service applies to your access to and active use of https://lemmy.world/, it's API's and sub-domain services (ex alt GUIs)(we, us, our the website, Lemmy.World, or LW) as well as all other properties and services associated with Lemmy.World.
Sag wasn't accessing or making active use of lemmy.world itself. This would be like an email provider blocking a particular address from another service because the user of that address doesn't comply with a part of their TOS.
The ActivityPub protocol is a decentralized social networking protocol based upon the [ActivityStreams] 2.0 data format. It provides a client to server API for creating, updating and deleting content, as well as a federated server to server API for delivering notifications and content.
Interesting. I've always considered an API a way to control some other software, while a protocol is about different software communicating. IDK, I just don't consider APub's S2S an API. Don't know if that'd hold up in court, but that's what I think.