Translation: if we introduced a domain that upset a national government, they might block access to that TLD. And that would be Bad.
Milton Mueller explains better than I can:
The idea that any domain name that is "controversial" constitutes a threat to the security, stability and universal resolvability of the internet is an absurdity that flies in the face of all internationally recognized standards of freedom of expression. We need to protect expression especially when it is controversial. In effect, this principle gives governments a blank check to smother any dissent, any hint of disagreement on the internet because it might lead some government, somewhere, to block a domain. This position is an outrage to freedom of expression principles. Its appeal to "universal resolvability" implies that the threat of authoritarian governments like China, or totalitarian dictatorships like North Korea or Iran, to block domains they object to is so horrible that all content on the internet should be pre-censored in order to ensure that it doesn't happen. Obvioously this puts the most conservative, pro-censorship regimes in the drivers seat. It is the most idiotic position one could imagine. That it is put forward by the U.S. government and a supine Canadian follower is an unspeakable tragedy.