A cease and desist from whom? I tried to search Nerfstudio on https://tmsearch.uspto.gov/bin/gate.exe?f=searchss&state=481... and nothing shows up there.

It's Nerf or nothin'

I'm assuming they mean from the owners of the Nerf brand of foam toys (I think owned by Hasbro nowadays). They could attempt to argue that NerfStudio dilutes the Nerf mark. Not necessarily a frivolous argument and they don't need to show likelihood of confusion in that case.

Trademarks are bound to markets / domains (toys vs computer perception). In my limited understanding, nerf the toys and nerf the computer perception tech, do not serve the same market.

That's not universally true. For most marks, you are right. But for certain particularly "famous" marks, the owner has a potential cause of action for dilution of the owner's mark. Unlike trademark infringement, which requires a showing of likelihood of confusion (which is bolstered by a showing that the two purported mark users serve the same market), trademark dilution does not.

thank you. Makes sense.