It is 'illegal' in the same way all foreign currency (more accurately, anything that isn't the ruble) is illegal - that is, you need specific permission to trade, hold or settle in any other currency.
In Russia currency is extremely regulated - you won't find rubles outside of Russia and within Russia what you can do with other currencies is extremely limited (and requires permission/licensing). They did this to stop locals fleeing the ruble and causing a crash. At one point 90%+ of all cash transactions in Russia were in foreign currency - so these laws stem from that period.
The best way to interpret this guidance would be as a reminder from the Russian government that bitcoin is not a replacement nor alternate currency for the ruble, and the same laws apply to it as apply to the USD and other foreign currencies.
This is far from a 'ban' on bitcoin, you can still hold bitcoin in the same way you can hold USD or any other foreign currency. You just can't settle domestic transactions in bitcoin.
