I believe thats what "family means trust and password sharing" meant.

Everybody knew this was not "legal-base family", it was advantageous for everyone to pay lip service to "family" while meaning "anyone you trust".

I pay for a Netflix plan that allows 4 people to stream at any one time. Why does it matter whether those people are biologically related or located geographically?

Because it's a discount for a family, which wouldn't pay for four separate accounts, but are used to share a lot. Families might share a smartphone, but friends and acquaintances wouldn't.