Michael Saylor - Lightning

Can someone clear this up for me ?
I’m watching Saylor interview David Marcus - Lightspark.
They keep referring to “Settlement”. Eg. At the 22:55 mark.

My understanding: there is no settlement on Lightning.
Until you settle back to the base layer. Since LN is not a DLT.

But especially so, since his service is a company; a 3rd party custodian, yeah ?
You literally give your money to a custodian; same with Cash App, or Strike. And hope they look after it for you.
And hope they give it back to you.

What am I missing here ?