It is 100% about media, image, and protecting the brand (think Cleveland Indians). It is 0% about some adult in a bar being offended. A single off-color name can cost you customers and sponsors, so the rules are a bit strict. Stricter at the national level than at the local level, because that's where big sponsors come from. APA allows each individual LO to be as loose or as strict as they want. I've ratcheted it down in my area quite a bit in the rise of social media, but it started when the newspapers would no longer publish my standings (yes, we used to get the standings published weekly) because of some of the team names. Another big concern is how the team name sounds when read aloud, not whether one "gets it" when reading the name somewhere. It has become a game of seeing what you can get away with, without consideration for what "getting away with" it just once might cost the organization.
The list is long and grows every year, and not every rejected name is on the list. It can't possibly be all-inclusive, a point that confuses teams every year ("it's not on the list, so it should be ok, right?").