The restriction applies to "online games", but keep in mind in China GaaS games(read: gacha games) are the norm, they are always online to fight piracy. So basically, this applies all the games that actually matters in China.
This will likely to push the China game industry to a new round of battle royal to fight for those little time they have from players, I feel bad for small shops, after 10 years of bloodbath China games had their monetization pattern in place(gacha/monthly passes/daily missions). Now they have to restart over and try again.
eSport scene? yeah, gone, but honestly this is probably good in the long run.
China shops has been winning this era of gaming and crubstomping JP/KR gamedevs with superior gacha models, server stability, update quality/quantity. This mandate will likely to halt their dominance and gave JP/KR a breather.
and I guess Bytedance's game divisions is a goner now...