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As I understand it from my time at AMD, TSMC provides what is essentially an SDK for specifying how to use their process for a given node. Clients translate (compile) their higher level specifications into this framework for fabrication, and own responsibility for characterizing (testing) the resulting silicon.

This separation of responsibilities presents TSMC with a difficult reverse engineering challenge if they were interested in violating their NDA.

They don't have to. Building a semiconductor fab is such an enormous investment and requires so much specific knowledge that it's not an attractive option, orders of magnitude harder than copying some software.

A similar question would be how Airbus prevents airlines from building their own airplanes.