The share button doesn’t require a subscription. It captures footage and stores it locally for you to freely do whatever you want with.

Nudity isn’t inherently sexual, and they pointedly have not mentioned it in the quoted text. It sounds like only explicit sexual content is forbidden, not nudity.

I do think even this is an overreach for a federated network, though, assuming Pixelfed is enforcing this on all instances (is that even possible?). It should be on the instance owners to make that decision. I couldn’t find where the quoted text is sourced from, however.