> The provider must mandate in their terms-of-service that users not remove the watermarking.

So, you don't own the generated text, and can't use it freely then. What if I copy paste a section, or rewrite a section of text to my liking? What if I rewrite some lines of code that contains the mark?

Security theater, and vague enough to be used as a weapon against who the government wishes.

I hope it's left off for non-EU customers.

You know you can just ignore EU laws outside of the EU