That only applies to showing a timeline. So you can't mix @user on Twitter with @user on Instagram in the same timeline. But if they aren't grouped, no problem. It also doesn't apply if there's human selection going on, a manual process. (Dunno if you can automate that with e.g. MT, heh.)
That seems reasonable. I don't like any of this social media stuff, but Twitter has the best APIs. Maybe because they sell access, so they want it to be a good product?
There are similar clauses in the requirements that apply to single tweets, and which e.g. prohibit the display of any social media buttons like "Like", "Share" etc. along a tweet, and that are pretty strict on the formatting of the tweet content itself.
They mean you can't mix the timelines together into one timeline. That seems to make sense to me. If you have a twitter timeline (which is different than tweets being displayed), it can only be Twitter.
https://dev.twitter.com/overview/terms/display-requirements