Proprietary? The backend maybe, but the keybase clients are open source. Some of the code is a little rough, and completed API docs would be nice, especially concerning KBFS, which is still missing. It's still under heavy development though, so these shortcomings should be understandable. (I personally won't use it much until I can actually develop my own non-reverse-engineered client, but that's just my requirement.)
No, the server implementation is proprietary. Therefore, it's a walled garden that relies entirely on them. Supporting federation would be going above/beyond just releasing the server implementation's source under a permissive license. As it stands today, you have no choice but to rely on their proprietary server implementation, since the clients are useless on their own.
Considering the whole point of end-to-end encryption is to reduce or eliminate necessary trust in the middleman, this seems like a minor, but still valid concern. Open sourcing the backend code wouldn't allow you to attest to what's running on the server. If the clients also allowed you to point to a custom server URL, which I would support, then the source availability might matter.
Without the proprietary server backend, you cannot use the clients. It's a walled garden. If keybase goes away for whatever reason, you're stuck. You cannot host it yourself, others cannot host it, and even if they released binaries, you'd have no idea what it is doing with the unencrypted 'metadata'.
I didn’t dispute the description of Keybase being labeled a walled garden. I opposed it being too-broadly called proprietary, when it’s not — only the backend is. And for anyone only using the official keybase servers, that’s irrelevant from a trust perspective, which is the reason people usually (mistakenly) bring up source code availability.
Now I’ll also partially dispute the accusation of it being a walled garden, since walled gardens don’t have open specifications and documented APIs for third-party client implementations.
The backend source code would be good to have, for the prudent reason you pointed out, as well as for private instances, but that’s not enough: you also need client code modifications to allow configuration for custom servers.
About binaries: anyone who thinks source code is required for determining program behavior probably shouldn’t be auditing software in the first place. (Often having just the source code makes it more difficult, not less.)