Ditto, would like to understand this. Lineage OS has much greater device support than Graphene. If you don't install Play Services why would Google have a say?

It was a Cyanogen feature called "Privacy Guard" in later releases. The devs haven't clearly explained what happened but it was likely threats of losing access to Play services and the Play store. Play services is the poison pill Google uses to support invasive tracking and ad delivery and they won't abide any interference with it.

That's not how this works. Google has no say in the matter. Custom ROMs always come without Google apps. You flash them on top of the ROM yourself if you need them. The file they come in isn't specific to any particular ROM either.

This happened back in the Cyanogen days where they released it on actual phones (by Oneplus if I remember correctly). They included the whole GAPPS-suite and of course fell under that license agreement.

You are confusing CyanogenMod (the custom ROM for which you supply your own Gapps) and Cyanogen OS (the commercial version of CyanogenMod) that was used by the OnePlus One and OnePlus Two.