ambigous sentence?

[myc]

I'm going over grammer smart, and on pg. 86 it says:
"Liberty has been defined as freedom limited by whatever causes harm to others, and this is how a person tries to live a moral life."

the book says: you more or less understand the writers point, but what exactly does this refer to? Liberty? Limited freedom?

but doesn't the sentence define Liberty as limited freedom? so why would this sentence be ambiguous?

Thanks

[mykwyner]

This is living your life in freedom (doing what you want) without doing harm to others.