Sure they can't hold your funds, or spend them, but they do get to control some portion of your ability to send/receive them. I don't know that it's fair to say that what defines a custodial service who's holding your private key. A cloud VPS service is custodial because it handles hardware provisioning and networking for me. A DNS provider is custodial because technically it's possibly to host your own name servers My ISP is custodial because it also does networking and routing for me as a service.

That would be a conflation of self-custody with self-hosting. Custody is, who holds the keys. Hosting is who controls the computer where the software is running. Now, if you are running your Alby Hub on anyone else's computer/server, it may still be self-custody, but it is not self-hosted, and there are certain sovereignty trade-offs you are making. They may or may not be worth it to you, but they are also very different tradeoffs from someone else holding the keys to your funds.