Here are the exact words of the "excluded area" requirement in
eCFR 1512 Code of Federal Regulations:
The regulation 1512 does not include a diagram of the excluded area, but the guidance article on the CPSC website has this diagram to help explain the regulation:
What is that extra tube between the top tube and the downtube? Maybe it's supposed to represent an alternate position of the top tube, where the body tube of a folding bike would be, or where the top tube of a mixte bike would be. (Maybe that's what the regulations mean by "female bicycle model", which is undefined in the regulation's definition section.)
Folding bikes that lack the typical top tube of a diamond frame bike may resemble the so-called female bicycle design, so perhaps that part of the regulation would apply to them. But it doesn't explicitly say so. Folding bikes with typical main-tube hinges have protrusions into the excluded area (the hinge) that exceed 1/4", so I guess they all would fail the detail of this regulation even though the tube "nearest the rider in the normal riding position" is very far away from the rider's body. Also, many folding bikes have braze-ons for mounting water bottle cages in the excluded are. The regulation is silent about them.
The hinge latch of the Dahon Jifo, for example, lies in the excluded area:
Perhaps (just a guess) why the Jifo hinge was replaced with a concealed hinge in the EEZZ which has a similar fold:
Are these CFR 1512 regulations chaotic and in many ways ridiculous, with little relationship to the true hazards of bicycles? Yes. They remind me of the proverb: A camel is a horse designed by a committee.