Even their fully self-hosted solution seems to come with most features locked behind paid subscriptions[1][2] which, whilst being perfectly fine on its own, is also a restriction that automatically disqualifies the software from being open source[3].
Edit: They're quite possibly violating their own licenses here, but I'm not a lawyer so don't take it as fact.
This seems concerning: "The Service should not be used to store sensitive information such as bank account numbers, credit card information, or passwords."
Why would a notes app dictate what content can be stored in it?
It’s disclaiming. They are saying they do not believe their cloud-first tool is the appropriate place for that sort of content.
Simplenote is run responsibly by serious people. They are telling you what is absolutely common sense, in my mind: it’s not normal to store sensitive information on cloud notepad services you do not (and cannot!) pay for.
I suspect the reason is that their continuous-sync process (which is like SubEthaEdit etc.) does not work with notes encrypted at source.
Apple Notes makes more of this but it’s provided by a firm with several orders of magnitude more money and resources behind it.
They are trying to tell you not to do something risky (for you and for them I guess).
Complain about it on some abstract rights-based level all you like if you feel that it's a strange "concerning" issue. They are good people and they are doing this for the goodwill only (really: read the story about how Matt Mullenweg bought the simplenote.com domain for $29,000 and gifted it to them before he even discussed buying them out).
Edit: They're quite possibly violating their own licenses here, but I'm not a lawyer so don't take it as fact.
[1]: https://standardnotes.com/help/48/can-i-use-extensions-with-...
[2]: https://standardnotes.com/help/self-hosting/subscriptions
[3]: https://opensource.org/osd/