The regulation is generally about the application side – things like “states, don’t have a social score system” or “companies, if you make a CV scanner you better be bloody sure it doesn’t discriminate”. Part of the application side already was regulated, e.g. car autopilots, this is simply a more comprehensive list of iffy and straight-up unconscionable uses.

Generating cat pictures with stable diffusion doesn’t even begin to fall under the regulation.

Here’s a good tl;dr