Thank you for asking this, the part about users not using LW for illegal activities is also unclear to me, is it an illegal activity in my country where I'm posting from, or an illegal activity where LW is registered. For example, being gay might be illegal where I live, it won't stop me accessing queer communities online.
That's an obvious situation for me, because it's such an unjust law, but a more vague example might be an 18 year old in the USA and and 18 year old in Australia discussing the consumption of alcohol and how to make homebrew. One of those people are breaking local laws. In the grand scheme of things this is a relatively harmless situation, but would this technology be a violation of the T&S?