In my experience things like "ban all muslims" end up being more race-based in the sense that they target any brown-ish West Asian or South Asian people. How many Sikhs have been targeted because people think they're Muslims? Regardless the point is not that explicitly religiously based or race based policies are okay, it's that refusing to staff certain positions in offices abroad or to require that employees be US citizens is not comparable to the government banning Muslims from entering the country.

Apparently it was an actual policy that the current United States administration wanted to implement, but I think it got shot down by the Supreme Court or Congress for being unconstitutional. So I guess the point is that it is a genuine example of a thing that governments might want to do...