This is lawyer-speak for something like:

"In order to use my cool, cool social media network, by accepting my Terms of Service (and yes, you do have to accept in order to use it), you agree not to sue me. Instead, we’ll settle our differences through a totally neutral third party, which is definitely not my buddy Joel’s company that I’m paying for.

So, if I ban you, make your content disappear, cut you off from your friends, leak your credentials, dox you and your family, etc., my buddy Joel (the neutral third party) won’t totally decide in my favour and make everything go away. Oh, and once we take the arbitration route that I’m forcing you to agree to, everything is considered confidential.

Good deal, right?"

Here’s a more detailed explanation from Pluralistic. He’s way, way more bullish on Bluesky’s pseudo-decentralisation than he should be, and even he is calling Bluesky out: