[toggle]

> Further clarification could be achieved by making the X button actually say "Disallow" and giving it a border separate from the word "Allowed."

I agree. An X usually means "close" or "hide this thing," whereas here they're using it to change a setting. It really looks like there should be a toggle switch there.

[past]

This is exactly right that X means "close" or "hide this thing" and this is what it does in this case as well: it removes the non-default setting and hides the list item.