I believe the claims are along the lines that the core of the Nvidia blob is actually the Windows driver, which is then not a derived work of Linux. They do provide the source for the bit that adapts between the Linux kernel and their blob.

If you are being most charitable, you could consider this like NDISWrapper which doesn't make the driver used become part of the kernel from a license point of view. The least charitable is that Nvidia are circumventing / violating the kernel GPL by their stunt.

Ultimately it would likely take some lawyers, time and money to get a strong decision, which no one seems willing to do, yet.

"we make exceptions for a small set of tools and drivers that make it possible to install Ubuntu and its free applications on everyday hardware" -- https://help.ubuntu.com/community/Repositories#Restricted