'gnopgnip may be referring to the much broader liability shield, for the content that you do not remove, which is provided by (c)(1) and has no good-faith requirement. That is Twitter's main "legal protection from defamation and libel" that you mention above.
Trump's executive order suggests that the (c)(1) liability shield could go away if you don't meet the (c)(2) good-faith requirements, which I gather is not considered a strong legal position.