[cormacrelf]

A fun thing about the law is that nobody cares about your interpretations of "demand" and "legal teeth, so to speak". The only important thing is that it was in fact framed as an offer: "demanded that I agree". The original question was:

> How is this legal in any shape or form?

And the answer is, any person or corporation has the power to make an offer not to sue. Consider this post a legally binding offer from me to you, not to sue you for any matter arising out of your reply to my comment. I demand thirty thousand US dollars for the covenant not to sue. You don't have to accept, but if you don't, or you agree but do not pay within 60 days, I reserve the right to sue.

You don't need any more authority or legal power than the power to contract. There is zero legal difference between what Facebook did, and what I just did. If you don't want to accept, I cannot make you. Facebook's negotiating position is only better because they have better lawyers, more money to waste on frivolous lawsuits, and the developer maybe felt they might have done something wrong.