Telemetry was included in what was open sourced, e.g. <https://github.com/google/pebble/blob/3b927684809fba173ee540...>

My read of that caveat from Google is that the code that was removed was third party code that Pebble had a proprietary license to use, thus it was not Google's to release.

> So much for “open source”

In the given context "Proprietary source code" seems to potentially primarily mean third-party proprietary source code which Google doesn't have the rights to re-license.

There's further discussion about what was removed & potentially why here: https://news.ycombinator.com/item?id=42845102

TL;DR: Hardware support library source/blobs from CPU/MCU hardware vendor(s) with restrictive license/distribution constraints.

(Some of which may no longer apply to more recent versions of the vendor code in question.)