Apple allows you to run any software you want on your device. If you want something that isn't in the appstore, then you can have a webapp that works as a native app, that can be downloaded from the web, appear as an app on a page of apps like all the other apps, and operate like an app with access to the sensors of the device. Apple provides a complete platform for development of these apps, completely out of apple's control. If you want a native app, you can get a developer account and install whatever software you want.

Apple does this for two reasons. The first is, giving developers these tools outside of Apple's control, is beneficial to the platform. Apple wants as much developer focus as it can. The second reason, and probably more important, is that by having unrestricted app access, Apple provides the best solution for all of its customers. More apps means happier customers.

The app store doesn't let you make malicious or pornographic apps. The former doesn't benefit anyone, and the latter while a silly restriction is easily circumvented by using the web based platform.

Apple's walled garden is more a marketing slogan of Apple's competitors than anything else. Apple really doesn't care, because what apple does, is focus on the users. (which is why iOS is an open platform.)