This will be a really big deal if they refine it a bit. Right now there doesn't seem to be any good way to add user-loadable "Apps" to an IoT device, and that's a really big problem with IoT.
Apps would free people from a specific cloud provider without requiring a separate server box which in itself is an expensive thing that can become obsolete. With apps, your cloud provider becomes swappable, and devices can connect directly, or you can choose to connect to a self-hosted controller.
The wording is confusing. They used an Ubuntu build system to run this script, which produces the firmware file to be flashed to the ESP32. The firmware is a minimal Linux-based OS, not Ubuntu.
Apps would free people from a specific cloud provider without requiring a separate server box which in itself is an expensive thing that can become obsolete. With apps, your cloud provider becomes swappable, and devices can connect directly, or you can choose to connect to a self-hosted controller.