They don't allow re-selling the engine or editor, that's why.
Technically it doesn't meet the open source definition because open source should allow people to commercialize the source code. Defold allows you to see the source, modify it, and make contributions, but even those modifications cannot be commercialized.
You are free to use it to make paid games, or make and sell plugins, etc.
I'm not a game dev, but its the engine King uses that they completely open sourced, and I think it can be a good alternative.