The whole point of this ROM is not including the Play Services at all.
Don't know if it is against their ToS to use the Google services with microG instead of the GApps.
But then, there's no TOS at this URL, and there's no point in taking this repo down, it would only make Google look bad and give microG free advertisement.
It'll probably violate the ToS of hitting Google's APIs. However, no OEM is shipping these. So there's no one to sue. The responsibility is on the user who flashes this. The code itself is free software. If Google sends a takedown to github or whatever, that would be a PR disaster. More practically though, if this becomes big, it would be trivial for Google to break the APIs.
Actually it's not trivial to change server APIs because they don't fully control all the clients (not even all officially supported ones).
For example: push notifications are supposed to work without setting up a Google account (if you use a certain Android version). But if you don't log in to your Google account, you're not receiving updates through Play Store, and thus Google can't update the client. Google breaking their claim will upset some of their users (probably not the typical smartphone users, but think of entertainment systems based on Android for example).
Also note that most Google ToS don't specifically forbid third party usage (and some also specifically allow them), the only thing that's forbidden is to misuse APIs in a harmful way. Just another example would be the login/account management part of microG, that uses the publicly described OAuth APIs, obviously intended for third-party use.
Pretty sure that this is simply copying an API, and Google specifically fought a court case against Oracle, against the notion that they couldn't copy Oracle's Java API. As such, I doubt they'd have a leg to stand on without giving Oracle another shot at them.