It grants them a two-year headspace in which licensees are prohibited to create a competing offering based on the open sourced code—so e.g. Amazon can't just take the source code and create a paid offering within AWS without contributing to upstream—at least for two years after officially licensing the software.

You can read the FSL license text here: https://github.com/getsentry/fsl.software/blob/main/FSL-1.1-...

Sounds like a reasonable tradeoff to ensure companies don't have immediate disadvantages from open sourcing their code.