Okay, here's the full explanation for you:

VTubers are simply people using 2D or 3D avatars that move using face tracking technology.

The issue at hand is that many VTubers have skimpy outfits but many of them are classy, i.e. not overly sexual. Furthermore, the content they produce is SFW even if at times they talk or joke about NSFW topics. Most of the time VTubers just engage in chat, gaming or reaction videos. And the official with Twitch's new rules is that changing a VTuber model requires hiring a digital artist and a model animator aka "rigger". These are super expensive, many of those models can cost thousands of dollars to make. So when Twitch days "cover your hips or be banned", VTubers whose models have FROM THE BEGINNING shown hips, now have to pay artists and riggers a huge amount of cash simply to cover themselves up.

To make things worse, Twitch's rules are arbitrary and unpredictable. Who knows if tomorrow they'll have to cover their shoulders? Cover their cleavage? Skirts below the knee? You don't know, and every single time Twitch updates their TOS, VTubers have to spend money just to stay in the business. The least Twitch could do is state a fixed, immutable set of rules so VTubers can design their own outfits without fear of being targeted by Twitch's sharia police. But that doesn't happen. Twitch rules keep changing over and over, but mysteriously they never affect women wearing super tiny bikinis and showing off their sexy bodies in their pools and hot tubs section.

That's the issue. That Twitch's TOS are not only unpredictable, but inconsistently enforced. One could say managers don't like VTubers and engage in these practices to virtually kick them off their platform.

TL;DR: VTubers are NOT porn. And yet, Twitch is selectively enforcing these rules against VTubers while completely allowing exactly the same - or even much more sexualized - content for IRL streamers in their bath tubs and pools section.