No, it just means that if they sue you, they're pre-committing to not try and foreclose on your own generated outputs by claiming they're derivatives that they would then own.
Of course, this is a water sandwich. If model outputs are derivatives of the model, it'd be difficult to argue that the model itself isn't a derivative of all the training data, most of which isn't licensed. So if anything, this covers Stability's ass, not yours. There's also the related question of if AI models - not their outputs, just the models themselves - have any copyright at all. The logic behind the non-copyrightability of AI art would also apply to the AI training process, so the only way you could get copyright would be a particularly creative way of organizing and compiling the training dataset.
Remember: while the "AI art isn't art" argument reeks to high heavens of artistic snobbery, it's not entirely wrong. There isn't a lot of creative control in the process. Furthermore, we don't give copyright to monkeys[2], so why should we give it to AI models?
"Noncommercial" isn't actually a thing in copyright law. Copyrighted works are inherently commercial artifacts[0], so if you just say "noncommercial use is fine", you've said nothing - and you've invited the legal equivalent of nasal goblins[1] into the courtroom. Creative Commons gets around this by defining their own concept of NonCommercial use. So what did Stability's lawyers cook up?
> “Non-Commercial Uses” means exercising any of the rights granted herein for the purpose of research or non-commercial purposes. Non-Commercial Uses does not include any production use of the Software Products or any Derivative Works.
Uh... yeah. That's replacing a meaningless phrase with a tautology. Fun. The only concrete grant of rights is research use, and they categorically reject "any production use", which is awfully close to all uses. Even using this to generate funny fanart mashups for your own personal enjoyment could be construed as a 'production use'. Stability could actually sue you for that (however unlikely that would be).
[0] In the eyes of the law. I actually hate this opinion, but it's the opinion the law takes.
[1] Under ISO 9899, it is entirely legal for C programs with undefined behavior to make goblins fly out of your nose.
[2] https://en.wikipedia.org/wiki/Monkey_selfie_copyright_disput...