I believe that phrase is alluding back to previous editions where spirits had very specific "domains" where they functioned. Back when spirits were separated by where they were summoned from (Hearth Spirits, City Spirits, River Spirits, etc).
So in that context, the reference to "terrain the critter controls" for the purposes of spirits is referring to what the spirit's "area of influence" is. An Earth spirit can use Movement on others only if they are on or near the ground, a Water spirit only in or on the surface of water. A Spirit of Man might only be able to use Movement in an urban environment, and an Air Spirit can't use Movement in an underground complex with no access to fresh air. All examples, and not strictly supported by anything, but it gives an idea what the implication might be.