That statement is just wrong. 500 watts is enough to get a road bike to 50mph on a flat road. Most of the energy goes to wind resistance at that speed. The weight of the bike and rider is only relevant when going uphill, not “cruising”
They're saying from a legal standpoint. As far as CPSC is concerned, they're not bicycles if they don't have pedals, and under many states' laws, pedals are a requirement to not be a motorcycle or moped.
Someone's never ridden an e-bike before. 500 watts on an 80 pound fat-tire bike is gonna get you like 10-15 mph cruising speed max.