My interpretation is that it's referring to actually embedding a tweet in a way that pulls it live via the API (or otherwise presented as a tweet entity), and that just quoting someone's tweet (like one would quote an article) is still fine (how could it not be?). I could be wrong.
These kinds of specific restrictions that aren't actually specific enough and really up to their whim are troubling. Twitter needs to be careful that their regulations don't become too much of a burden on their ecosystem. The vagueness and uncertainty of their rules is the problem.
Yeah, on second reading, I was totally wrong. I went and looked at the actual document (what a concept, heh) and they are specifically talking about using applications to display or embed tweets.
I still don't think that's a great idea, but it concerns me a lot less.
That there's any confusion is why this is a problem. Once you start getting into centralized, micromanegerial control of the content of applications, you have to handle all the details, all the edge cases. Law has the same problem.
These kinds of specific restrictions that aren't actually specific enough and really up to their whim are troubling. Twitter needs to be careful that their regulations don't become too much of a burden on their ecosystem. The vagueness and uncertainty of their rules is the problem.