Seems to be working for me... If "only members can post" option is selected, then only email addresses listed there can send to that distribution list.
It is through MAIL FROM address, which, usually, matches FROM header of email message you are sending.
In that list you can add addresses, which are not members of distribution list. They will be able to send, but they will be not receiving whatever they sent.
You are right, wording is confusing. I will change the prompt "Only members can post" to "Only following senders can post".