People are just waking up to the fact that theory isn't reality.

Everything be it software or anything else is beholden only to those who is the highest bidder. Being FOSS doesn't change anything. This has been true for some time now that Linux and TLF is duty bound to businesses running it.

It had been covert till now, it is the overtness of this action which is surprising to most. I for one am surprised it didnt happen sooner.

It's banning contributors but not contributions themselves. So there must be inconvenience but somewhat effective workarounds. That could be fun to see unfold.

Certain Open Source movements are pure bigotry and opportunism, the Linux Kernel / The Linux Foundation for example, so it doesn't really make me wonder.

If you are having sensitive information stored using closed-source software/OS, you can stop reading right here. This is your biggest vulnerability and the best thing you can do is to switch to FOSS.

For those that have already switched:
It made me think about how to improve the resistance of large FOSS projects against state-sponsored attackers injecting backdoors.

The best thing i came up with would be to have each contribution checked by a contributor of a rival state. So a Russian (or Chinese) contributor verifies a contribution by an American.
The verifying contributors would have to be chosen at random in a way that is not predeterminable by an attacker, otherwise a Chinese-state contributor will contribute harmless code until the next verifier will be a US-based Chinese spy. Then they will submit a backdoor and have it checked by an American citizen paid by China.
Also the random number generator has to be verifiable by outsiders, otherwise a spy in the Linux-Foundation can manipulate the outcome of choosing a favorable verifier for a backdoor.

This can obviously only be done as long as there are lots of contributors from rivaling states. If the US decided that Linux can only allow contributors from USA/EU, then this model can not work and Linux would have to relocate into a more favorable state like Switzerland.

What one should keep in mind that even if the US would ban all foreign contributions and the foundation would not relocate, Linux would still be more secure than any closed source OS, as those foreigners can still look at the code and blow the whistle on bugs/backdoors. It would however be much more insecure than it is now, as the overhead for finding bugs/backdoors would be much larger.

I'm not concerned that they followed the best advice of their lawyers to respond to the legal and political challenges that currently exist.

I am concerned that hostile nation states (define those as you will) have made supply chain attacks (remember the xz Utils backdoor) so common that actions like this or worse are becoming necessary and that open source, globally contributed software could be at risk.