Basically every diesel engine after the early 2010s needed to have several emissions systems (EGR, DPF + DEF). You can do some reading on them if you're curious, but they basically all reduce reliability, efficiency (DPFs choke exhaust, and airflow is critical to a diesel running well), and power from the same engine without them.
In terms of legality, it means manufactures need to include all of those systems and their associated complexity, but the way that this startup is getting around it is using engines that were built before those requirements and are thus grandfathered into not needing them.
Also on the legal side, there's a thriving black market of mechanics who are willing to rip all those systems out of diesel engines. It's not uncommon to see double-digit percent increases in both power and fuel economy after it's done. The EPA has prosecuted a few cases against shops and parts suppliers for those "diesel deletes"