Not agreeing or disagreeing with the parent, but when I’ve seen this argument in the past it’s usually meant as “they’re not using GPL so nothing stops someone from copying the code, creating something new, and then not being forced to distribute their source.”
Essentially they usually mean it’s not Open Source if at some point the source code of downstream projects could be closed source.
Doesn't this theory apply to almost anyone with the capability to dual license. Which I thought was any project that had agreement from the original authors.
Yep. Or “free software” / FOSS. The term Open source was largely popularised by Eric Raymond and the OSI. It was coined with the release of the source code of Netscape navigator and was famously - and controversially - always business friendly.