> This doesn't make sense to me. They could just say the software is provided as-is and Microsoft holds no liability.

You cannot effectively disclaim certain liability for uses of a product you supply, even with an as-is presentation (exactly what liability depends on jurisdiction and often other context). Merely claiming to have no liability does not make it so (what it will usually do is disclaim all yhe liability you can disclaim, except for particular liabilities that may require separate explicit specific waivers to be effective.)

OTOH, if the product you provide is a software license that doesn't cover specific uses, using the software for the excluded uses may not be seen as a use of the product provided at all, and may not trigger the non-disclaimable liabilities, and even it doesn't avoid those liabilities, in the event someone sues over them, it also enabled the product supplier to countersue for infringement damages and mitigate the liabilities.